Questions -
1. Pop Corporation paid $100,000 cash for the net assets of Son Company, which consisted of the following: Book Value Fair Value Current assets $ 40,000 $ 56,000 Plant and equipment 160,000 220,000 Liabilities assumed (40,000) (36,000) $160,000 $240,000 Assume Son Company is dissolved. The plant and equipment acquired in this business combination should be recorded at:
1. $220,000
2. $200,000
3. $183,332
4. $180,000
2. On April 1, Pam Company paid $1,600,000 for all the issued and outstanding common stock of Sun Corporation in a transaction properly accounted for as an acquisition. Sun Corporation is dissolved. The recorded assets and liabilities of Sun Corporation on April 1 follow: Cash $160,000 Inventory 480,000 Property and equipment (net of accumulated depreciation of $640,000) 960,000 Liabilities (360,000) On April 1, it was determined that the inventory of Sun had a fair value of $380,000, and the property and equipment (net) had a fair value of $1,120,000.
What is the amount of goodwill resulting from the acquisition?
1. 0
2. $100,000
3. $300,000
4. $360,000