Question

Flom Company is considering the cash purchase of 100% of the outstanding stock of Vargas Company. The terms are not set, and alternative prices are being considered for negotiation. The balance sheet of Vargas Company shows the following values:
Appraisals reveal that the inventory has a fair value of $160,000 and that the land and building have fair values of $120,000 and $300,000, respectively.
1. Above what price will goodwill be recorded?
2. Below what price will a gain be recorded?


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  • CreatedApril 10, 2015
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