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Stillman Company is considering purchasing EKC Company

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Question;Stillman Company is considering purchasing EKC Company. EKC's balance sheet at December 31, 2013, is as follows:Cash $51,000 Current liabilities $55,000Accounts receivable 71,000 Bonds payable 158,000Inventory 120,000 Common stock 225,000Property, plant, and equipment (net) 640,000 Retained earnings 444,000$882,000 $882,000At December 31, 2013, Stillman discovered the following about EKC:No allowance for uncollectible accounts has been established. An allowance of $5,200 is considered appropriate.The LIFO inventory method has been used. The FIFO inventory method would be used if EKC were purchased by Stillman. The FIFO inventory valuation of the December 31, 2013, ending inventory would be $188,000.The fair value of the property, plant, and equipment (net) is $760,000.The company has an unrecorded patent that is worth $100,000.The book values of the current liabilities and bonds payable are the same as their market values.Required:1. Compute the value of the goodwill if Stillman pays $1,361,800 for EKC.Accounting

 

Paper#45059 | Written in 18-Jul-2015

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