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acct 450 ch2

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On June 1, Cline Co. paid $892,000 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

$
178,000

Accounts receivable

237,000

Capitalized software costs

374,000

Goodwill

110,000

Liabilities

(201,000
)

Net assets

$
698,000

Note: Parentheses indicate a credit balance.
On June 1, Renn’s accounts receivable had a fair value of $155,000. Additionally, Renn’s in-process research and development was estimated to have a fair value of $235,000. All other items were stated at their fair values. On Cline’s June 1 consolidated balance sheet, how much is reported for goodwill?

$151,000.

$374,000.

$41,000.

$69,000.

Consideration transferred (fair value)

$
892,000
Cash

$
178,000

Accounts receivable

155,000

Capitalized software costs

374,000

Research and development asset

235,000

Liabilities

(201,000
)

Fair value of net identifiable assets acquired

741,000

Goodwill

$
151,000

2. award: 0 out of
0.00 points

On May 1, Donovan Company reported the following account balances:

Current assets

$
113,500

Buildings & equipment (net)

261,500

Total assets

$
375,000

Liabilities

$
95,000

Common stock

150,000

Retained earnings

130,000

Total liabilities and equities

$
375,000

On May 1, Beasley paid $453,900 in stock (fair value) for all of the assets and liabilities of Donovan, which will cease to exist as a separate entity. In connection with the merger, Beasley incurred $19,400 in accounts payable for legal and accounting fees.
Beasley also agreed to pay $83,900 to the former owners of Donovan contingent on meeting certain revenue goals during the following year. Beasley estimated the present value of its probability adjusted expected payment for the contingency at $22,000. In

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