Cindy purchases a business for $250,000. The fair market value of the assets of

Question

Cindy purchases a business for $250,000. The fair market value of the assets of the business is as follows: Equipment Building Inventory $ 90,000 $135,000 15,000 What is Cindy's cost basis in each asset? a. $90,000 equipment, $135,000 building, $10,000 inventory, $15,000 goodwill. b. $93,750 equipment, $140,625 building, $15, 625 inventory c. $90,000 equipment, $135,000 building, $10,000 goodwill, $15,000 inventory d. $100,000 equipment, $150,000 building, $0 inventory, $0 goodwill. e. None of the above.

Explanation / Answer

Cindy has paid 10000 more for goodwill

So correct option is C.

Assets are recorded at the price they are acquired, so all the asset will be recorded at their cost, remaining 10000 will be recorded as goodwill.

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