Questions -

1. Jenks Corporation acquired Linebrink Products on January 1, 2016 for $8,000,000, and recorded goodwill of $1,700,000 as a result of that purchase. At December 31, 2016, the carrying value of Linebrink Products's net identifiable assets (including goodwill) is $7,500,000. An independent valuation firm estimates Linebrink Products to have a fair value of $6,800,000. What amount of goodwill should Jenks report on its 2016 balance sheet (after goodwill impairment has been recorded)?

$0

$700,000

$1,200,000

$1,000,000

2. Big Company purchases Small Company for $1,600,000 cash on January 1, 2015. The book value of Small Company's net assets, as reflected on its December 31, 2014 balance sheet is $1,240,000. An analysis by a valuation consultant on December 31, 2014 indicates that the fair value of Small Company's net assets exceeded the book value by $210,000. How much goodwill should be recognized by Big Company due to the purchase of Small Company?

$150,000

$570,000

$360,000

$0