On January 1, 2019, Everlasting, Inc. purchased Comet Corporation for $650,000. On that date the net assets of Comet had a book value of $320,000, and book values were equal to fair values with the following exceptions: FIFO Inventory --Undervalued, $30,000

Land--Undervalued, $10,000

Equipment (5 year life)--Undervalued, $75,000

Patent (5-year life)--Undervalued, $25,000

During 2019, Everlasting had income from its own operations of $220,000 and Comet had net income of $80,000.

38. What amount of 2019 Equity Income was recognized by Everlasting?


39. What is 2019 consolidated net income?


40. What amount of goodwill appeared on the consolidated balance sheet at December 31, 2019?

A. $30,000

B. $250,000

C. $190,000

Explanation:

A. Calculation for What amount of 2019 Equity Income was recognized by Everlasting

Based on the information given the amount of 2019 Equity Income that was recognized by Everlasting will be $30,000 which is FIFO Inventory Undervalued amount.

B. Calculation for 2019 consolidated net income

Everlasting had income from its own operations of $220,000

Add FIFO Inventory --Undervalued, $30,000

Consolidated net income $250,000

C. Calculation for What amount of goodwill appeared on the consolidated balance sheet at December 31, 2019

Cost of Acquisition $650,000

Less: Book value $320,000

FIFO Inventory --Undervalued, $30,000

Land--Undervalued, $10,000

Equipment , $75,000

Patent, $25,000

Goodwill $190,000

answer; the correct answer to the above statement is (true);