# 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.

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