IOU Inc Purchased All of the Outstanding Common Shares of UNI

question 1

Multiple Choice

IOU Inc. purchased all of the outstanding common shares of UNI Inc. for cash of $800,000. On the date of acquisition, UNI's assets included $2,000,000 of Inventory, and Land with a Book value of $120,000. UNI also had $1,400,000 in Liabilities on that date. UNI's book values were equal to their fair market values, with the exception of the company's Land, which was estimated to have a fair market value which was $50,000 higher than its book value. UNI also had patent rights with a fair market value on acquisition date of $20,000 that were not shown on its balance sheet because the rights had been developed internally. How much goodwill would be created by IOU's acquisition of UNI?

• A) $30,000
• B) $10,000
• C) $70,000
• D) $80,000

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Definitions:

Grading

The process of evaluating or assessing the quality, value, or performance of someone or something, often used in education and product quality assessment.