Question

Crane Company purchases Cullumber Company for $5550000 cash on January 1, 2021. The book value of...

Crane Company purchases Cullumber Company for $5550000 cash on January 1, 2021. The book value of Cullumber Company's net assets reported on its December 31, 2020 financial statement was $4150000. An analysis indicated that the fair value of Cullumber's tangible assets exceeded the book value by $710000, and the fair value of identifiable intangible assets exceeded book value by $375000. Determine the fair value of identifiable net assets used to record goodwill.

$5235000.
$4150000.
$4860000.
$335000.
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Answer #1

Book value of Cullumber company's net assets = $4,150,000

Excess of fair value of tangible assets of Cullumber company over book value = $710,000

Excess of identifiable intangible assets of cullumber company over book value = $375,000

fair value of identifiable net assets = Book value of Cullumber company's net assets + Excess of fair value of tangible assets of Cullumber company over book value + Excess of identifiable intangible assets of cullumber company over book value

= 4,150,000 + 710,000 + 375,000

= $5,235,000

First option is correct

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