Strong Company Has Had Poor Operating Results in Recent Years

question 122

Multiple Choice

Strong Company has had poor operating results in recent years and has a $160,000 net operating loss carryforward. Leader Corp. pays $700,000 to acquire Strong and is optimistic about its future profitability potential. The book value and fair value of Strong's identifiable net assets is $500,000 at date of acquisition. Strong's tax rate is 30% and Leader's tax rate is 40%. What is goodwill resulting from this business acquisition?

• A) $40,000.
• B) $88,000.
• C) $104,000.
• D) $152,000.
• E) $248,000.

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