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Category > Accounting Posted 28 Apr 2017 My Price 3.00

Simple value analysis

Exercise 3 (LO 5) Simple value analysis. Flower Company is considering the cash pur- chase of 100% of the outstanding stock of Vase Company. The terms are not set, and alternative prices are being considered for negotiation. The balance sheet of Vase Company shows the fol- lowing values:

Assets Liabilities and Equity

Cash equivalents . . . . . . . . . . . . . .	$ 60,000	Current liabilities . . . . . . . . . . . . . .	$ 60,000
Inventory . . . . . . . . . . . . . . . . . . . .	120,000	Common stock ($5 par). . . . . . . . .	100,000
Land. . . . . . . . . . . . . . . . . . . . . . . .	50,000	Paid-in capital in excess of par . . .	150,000
Building (net) . . . . . . . . . . . . . . . . .	200,000	Retained earnings . . . . . . . . . . . . .	120,000

Total assets. . . . . . . . . . . . . . . . . $430,000 Total liabilities and equity . . . . . $430,000

Appraisals reveal that the inventory has a fair value of $160,000 and that the land and build- ing have fair values of $100,000 and $300,000, respectively. Above what price would goodwill be recorded?

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Alpha Geek

(8)

Status NEW Posted 28 Apr 2017 11:04 AM My Price 3.00

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