Question

Exercise 7-6A Calculate the amount of goodwill (LO7-2) Mainline Produce Corporation acquired all the outstanding common stock of Iceberg Lettuce Corporation for $28,000,000 in cash. The book values and fair values of Iceberg's assets and liabilities were as follows: Current assets Property, plant, and equipment Other assets Current liabilities Long-term liabilities Book Value $11,200,000 27,000,000 2,800,000 7,200,000 18,800,000 Fair Value $14,200,000 33,000,000 3,800,000 7,200,000 17,800,000 Required: Calculate the amount paid for goodwill. (Enter your answer in millions (i.e. 5,000,000 should be entered as 5).) Amount paid for goodwill million | This is a numeric cell, so please enter numbers only.

Answer 1

answers is $ 2,000,000 Goodwill = Consideration Paid - Fair Value of Net Identifiable Assets acuired Fair Value of Net Identifiable Assets = Fair Value of Assets - Fair Value of Liabilities Fair Value of Net Identifiable Assets of Iceberg Lettuce Corporation: current asset $ property plant $ other asset $ Less current liability Less long term liabilitis $ Fair Value of Net Identifiable Assets $ 14,200,000 33,000,000 3,800,000 (7,200,000) (17,800,000) 26,000,000 considertaion paid Fair Value of Net Identifiable Assets Goodwill Amount Paid = $ $ $ 28,000,000 (26,000,000) 2,000,000 Please comment if you have any doubt Please give thumps up if you satisfied with the answer