On June 1, Cline Co. paid $800,000 cash for all of the issued and outstanding common stock

Question:

On June 1, Cline Co. paid $800,000 cash for all of the issued and outstanding common stock of Renn Corp. The carrying values for Renn’s assets and liabilities on June 1 follow:

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 150,000

Accounts receivable . . . . . . . . . . . . . . . . . . . 180,000

Capitalized software costs. . . . . . . . . . . . . . . 320,000

Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000

Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . (130,000)

Net assets . . . . . . . . . . . . . . . . . . . . . . . . . $ 620,000

On June 1, Renn’s accounts receivable had a fair value of $140,000. Additionally, Renn’s in process research and development was estimated to have a fair value of $200,000. All other items were stated at their fair values. On Cline’s June 1 consolidated balance sheet, how much is reported for goodwill?

a. $320,000.

b. $120,000.

c. $80,000.

d. $20,000.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...