Question

As kill Corporation (As kill), a public corporation, has concluded negotiations with Basket Corporation (Basket) for the purchase of all of Basket’s net assets at fair value, effective January 1, 20X7. An examination at that date by independent experts disclosed that the fair value of Basket’s inventories was $ 300,000; the fair value of its machinery and equipment was $ 320,000.
Additional Information:
• The fair value of the patent was $ 62,000. The values of the accounts receivable and of the current and long- term liabilities were equal to their carrying value.
• The purchase agreement stated that the purchase price of all the net assets will be $ 540,000 payable in cash.
• Both corporations have December 31 year- ends. The statements of financial position of both corporations, as at the date of the implementation of the purchase agreement (January 1, 20X7), are as follows:

.:.
Required
1. What is the amount of goodwill that would be recorded for the business combination?
2. Prepare As kill’s SFP at January 1, 20X7.



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  • CreatedMarch 13, 2015
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