Rommer Company purchases Daley Inc. for $960,000 cash on January 1, 2017. The book value of Daley Company’s net assets, as reflected on its December 31, 2016 statement of financial position is $740,000. An analysis by Rommer on December 31, 2016 indicates that the fair value of Daley’s tangible assets exceeded the book value by $70,000, and the fair value of identifiable intangible assets exceeded book value by $35,000. How much goodwill should be recognized by Rommer Company when recording the purchase of Daley Inc.?
A. $70,000
B. $115,000
C. $150,000
D. $220,000
Answer:B
Rommer Company purchases Daley Inc. for $960,000 cash on January 1, 2017. The book value of Daley Company’s net assets, as reflected on its December 31, 2016 statement of financial position is $740,000. An analysis by Rommer on December 31, 2016 indicates that the fair value of Daley’s tangible assets exceeded the book value by $70,000, and the fair value of identifiable intangible assets exceeded book value by $35,000. How much goodwill should be recognized by Rommer Company when recording the purchase of Daley Inc.?
A. $70,000 B. $115,000 C. $150,000 D. $220,000