Assume that Bullen issued 12,000 shares of common stock, with a $5 par value and a $47 fair value, to obtain all of Vicker’s outstanding stock. In this acquisi

A) $144,000.

B) $104,000.

C) $  64,000.

D) $  60,000.

E) $            0.

Answer: B

Learning Objective: 02-05

Topic: Acquisition―Calculate consideration transferred

Topic: Acquisition―Calculate goodwill or bargain

Difficulty: 2 Medium

Blooms: Apply

AACSB: Knowledge Application

AICPA: BB Critical Thinking

AICPA: FN Measurement

Feedback: Goodwill = Consideration Transferred less Acquisition Date Fair Value of Net Assets Acquired and Liabilities Assumed

Consideration Transferred: $47 × 12,000 = $564,000

Fair Value of Assets Acquired: 70,000 (cash and receivables) + 210,000 (inventory) + 240,000 (land) + 270,000 (buildings) + 90,000 (equipment) = $880,000

Fair Value of Liabilities Assumed: $420,000

Consideration Less Net Assets/Liabilities = $880,000 – $420,000 = $460,000

Goodwill: $564,000 – $460,000 = $104,000