GoodwillValman Company is considering purchasing EKC Company. EKC's balance sheet at December 31, 2019, is as follows:Cash$54,000 Current liabilities$64,000Accounts receivable65,000 Bonds payable219,000Inventory140,000 Common stock350,000Property, plant, and equipment (net)600,000 Retained earnings226,000 $859,000 $859,000At December 31, 2019, Valman discovered the following about EKC:No allowance for uncollectible accounts has been established. An allowance of $4,500 is considered appropriate.The LIFO inventory method has been used. The FIFO inventory method would be used if EKC were purchased by Valman. The FIFO inventory valuation of the December 31, 2019, ending inventory would be $204,000.The fair value of the property, plant, and equipment (net) is $720,000.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 Valman pays $1,350,500 for EKC.$ fill in the blank

Goodwill means the reputation which a firm enjoy because any factor like good after sale service ,…

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Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter12: Intangibles

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Goodwill

Valman Company is considering purchasing EKC Company. EKC's balance sheet at December 31, 2019, is as follows:

Cash	$54,000	Current liabilities	$64,000
Accounts receivable	65,000	Bonds payable	219,000
Inventory	140,000	Common stock	350,000
Property, plant, and equipment (net)	600,000	Retained earnings	226,000
	$859,000		$859,000

At December 31, 2019, Valman discovered the following about EKC:

No allowance for uncollectible accounts has been established. An allowance of $4,500 is considered appropriate.
The LIFO inventory method has been used. The FIFO inventory method would be used if EKC were purchased by Valman. The FIFO inventory valuation of the December 31, 2019, ending inventory would be $204,000.
The fair value of the property, plant, and equipment (net) is $720,000.
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 Valman pays $1,350,500 for EKC.

$ fill in the blank

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