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.

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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