Flom Company is considering the cash purchase of 100% of the outstanding stock of Vargas Company. The terms are not set, and alternative prices are being considered for negotiation. The balance sheet...

Flom Company is considering the cash purchase of 100% of the outstanding stock of Vargas Company. The terms are not set, and alternative prices are being considered for negotiation. The balance sheet of Vargas Company shows the following values:

Appraisals reveal that the inventory has a fair value of $160,000 and that the land and building have fair values of $120,000 and $300,000, respectively.

1. Above what price will goodwill be recorded?

2. Below what price will a gain be recorded?