The Smithson Corporation acquired all of the outstanding common stock of the Rider Corporation in exchange...
The Smithson Corporation acquired all of the outstanding common stock of the Rider Corporation in exchange for $180 million cash. Smithson assumed all of Rider’s long-term liabilities, which have a fair value of $120 million at the date of acquisition. The fair values of all identifiable assets of Rider are as follows: receivables of $50 million, inventory of $70 million, property, plant, and equipment of $90 million, and patent of $40 million). What is the cost of the goodwill resulting from the acquisition?
Homework Answers
| Fair value of consideration exchanged | 180 | ||
| Less: Fair value of net assets acquired: | |||
| Fair value of identifiable assets acquired | 250 | =50+70+90+40 | |
| Less: Fair value of liabilities assumed | (120) | ||
| Fair value of net assets acquired | (130) | ||
| Goodwill | 50 | million | |
| Cost of the goodwill resulting from the acquisition = $50 million | |||
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The Smithson Corporation acquired all of the outstanding common
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