Cozzi Company Is Being Purchased and Has the Following Balance

question 35

Multiple Choice

Cozzi Company is being purchased and has the following balance sheet as of the purchase date:
$$\begin{array} { c c c c } \text { Current assets } & \$ 200,000 & \text { Liabilities } & \$ 90,000 \\\text { Fixed assets } & \underline { 180,000 } & \text { Equity } & \underline { 290,000 }\\\text { Total } & \underline { \$ 380,000} & \text { Total } & \underline { \$ 380,000 }\\\end{array}$$ The price paid for Cozzi's net assets is $500,000.The fixed assets have a fair value of $220,000, and the liabilities have a fair value of $110,000.The amount of goodwill to be recorded in the purchase is:

• A)$0
• B)$150,000
• C)$170,000
• D)$190,000

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Definitions:

Preference

A prioritization or favoring of certain options, creditors, or interests over others, often relevant in legal and financial contexts.

General Contractor

A primary contractor responsible for overseeing a construction project, managing subcontractors, and ensuring the work is completed as specified in the contract.

Trustee In Bankruptcy

The licensed professional appointed to administer the estate of a bankrupt for the benefit of the creditors.

Guarantee

A formal assurance or promise that certain conditions will be fulfilled, including products meeting specific standards or services being satisfactorily rendered.