Hardware, Inc. purchased 100% of the common shares of Software, Inc. for $470,000 on 1/1/07....
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Accounting
Hardware, Inc. purchased 100% of the common shares of Software, Inc. for $470,000 on 1/1/07. Software, Inc.'s balance sheet just before the purchase appears below:
Cash $ 90
Net fixed assets 220
Total assets 310
Liabilities 240
Stockholders' equity 70
Total liabilities and stockholders' equity: 310
The fair market value of Software's assets and liabilities were equal to their book values. Show calculations. 1) Compute the goodwill recognized by Hardware for the purchase.
2) How would goodwill appear on Hardware's financial statements?
3) Hardware has net income, excluding Software for 2007 of $150,000. Software has a net loss for 2007 of $10,000. Compute consolidated net income for 2007.
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