The Elm Company is considering purchasing the EKC Company. The balance sheet of the EKC Company at December 31, 2007 is as follows:

At December 31, 2007 the Elm Company discovered the following about the EKC Company:
1. No allowance for uncollectible accounts has been established. An allowance of $5,000 is considered appropriate.
2. The LIFO inventory method has been used. The FIFO inventory method would be used if EKC were purchased by Elm The FIFO inventory valuation of the December 31, 2007 ending inventory would be $180,000.
3. The fair value of the property, plant, and equipment (net) is $730,000.
4. The company has an unrecorded patent that is worth $120,000.
5. The book values of the current liabilities and bonds payable are the same as their market values.

Required
Compute the value of the goodwill if the Elm Company pays $1,350,000 forEKC.

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Cash Accounts receivable Inventory Property, plant, and equipment (net) s 50,000 Current liabilities 60,000 200,000 300,000 600,000 Retained earnings 280,000 $840,000 70,000 Bonds payable 120,000 Common stock 840,000