ABC123 Inc Has Decided to Purchase 100% the Voting Shares

question 17

Essay

ABC123 Inc has decided to purchase 100% the voting shares of DEF456 for $400,000 in Cash on July 1, 2012. On the date, the balance sheets of each of these companies were as follows: On that date, the fair values of DEF456 Assets and Liabilities were as follows: In addition to the above, an independent appraiser deemed that DEF456 Inc. had trademarks with a fair market value of $100,000 which had not been accounted for. In turn, ABC123's fair market values were equal to their book values with the exception of the Company's Inventory and Plant and Equipment, which were said to have Fair Market Values of $30,000 and $480,000, respectively. Assuming that DEF456's Plant and Equipment was worth $400,000. Calculate the goodwill arising from this business combination and state how it would be shown in the consolidated balance sheet on the acquisition date.

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Definitions:

Immature Red Blood Cell

An early stage in the development of red blood cells, not yet fully matured or functional.

RIA

Stands for Radioimmunoassay, a sensitive laboratory technique used to measure concentrations of substances, such as hormones, in the blood.

Acid Stain

A coloring technique used in microscopy to identify and differentiate among various types of cells and tissues, often using acidic dyes.

Rose-colored Stain

A dye or staining method used in microbiology to highlight structures in microbial and human cells.