Patent Corp How Much Goodwill Should Be Recorded?
A)$47,000
B)$53,000
C)$70,000
D)$100,000

question 36

Multiple Choice

Patent Corp., a publicly accountable entity, purchased a company with the following assets and liabilities for $100,000: $$\begin{array} { | l | r | r | } \hline & \text { Carrying value } & \text { Fair value } \\\hline \text { Cash } & 10,000 & 10,000 \\\hline \text { Inventories } & 18,000 & 17,000 \\\hline \text { Property, plant and equipment } & 12,000 & 10,000 \\\hline \text { Intangible assets } & 32,000 & 40,000 \\\hline \text { Accounts payable } & 15,000 & 15,000 \\\hline \text { Long-term liabilities } & 10,000 & 15,000 \\\hline \text { Equity } & 47,000 & \\\hline\end{array}$$ How much goodwill should be recorded?

• A)$47,000
• B)$53,000
• C)$70,000
• D)$100,000

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Definitions:

Cash Flow

The entire monetary cycle within and outside a corporation, importantly determining its instant financial stability.

Assets

Economic resources owned by a business or individual that are expected to provide future benefits.

Dividends

Dividends are payments made by a corporation to its shareholders, typically out of its profits, as a distribution of earnings.

Net Income

The remaining earnings of a business after subtracting all expenditures and taxes from its total income.