Question

Book Value Fair Value Assets $ 400,000 $ 500,000 Liabilities 45,000 45,000 Net income 25,000 How much goodwill would be recorded if Torretta Holdings purchases Vikings, assuming its liabilities, for $635,000?

Answer 1

Answer:

goodwill to be record = $180000

Explanation:

given data

                Book Value                  Fair Value

Assets        $400,000                     $500,000

Liabilities       45,000                         45,000

Net income = 25,000

solution

first we get here net assets that is express as

net assets = fair value of assets - liability taken    .....................1

net assets = $500000 - $45000

net assets = $455000

so now we get here goodwill that is

goodwill = purchase consideration - net assets   .........................2

put here value

goodwill =  $635000 - $455000

goodwill = $180000