On June 1, Cline Co paid $1,082,000 cash for all of the issued and outstanding common...
On June 1, Cline Co paid $1,082,000 cash for all of the issued and outstanding common stock of Renn Corp. The carrying amounts for Renn's assets and liabilities on June 1 follow:
Cash $323,000
Accounts Receivables 226,000
Capitalized software costs 399,000
Goodwill 168,000
Liabilities (170,000)
Net assets $855,000
On June 1, Renn's accounts receivable had a fair value of $160,000. Additionally, Renn's in-process research and development was estimated to have a fair value of $251,000. All other items were stated at their fair values. On Cline's June 1 consolidated balance sheet, how much is reported for goodwill?
Homework Answers
Goodwill
= Consideration paid - Fair value of net assets received
= 1,082,000 - [(Cash 323,000+Accounts Receivable 160,000+software cost 399,000+research and development in process 251,000) - Liabilities 170,000]
= 1,082,000 - (1,133,000 - 170,000)
= 1,082,000 - 963,000
= $119,000
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