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Ivanhoe Company purchases Miles Company for $3700000 cash on January 1, 2018. The book value of...

Ivanhoe Company purchases Miles Company for $3700000 cash on January 1, 2018. The book value of Miles Company's net assets reported on its December 31, 2017 financial statement was $3100000. An analysis indicated that the fair value of Miles's tangible assets exceeded the book value by $500000, and the fair value of identifiable intangible assets exceeded book value by $270000. What amount of gain or goodwill is recognized by Ivanhoe?

$770000 gain.
$500000 goodwill.
$170000 gain.
$170000 goodwill.
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Answer #1

Gain

= Fair value of net assets - Cash paid

= (3,100,000+500,000+270,000) - 3,700,000

= 3,870,000 - 3,700,000

= 170,000

Option C is the answer
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