Solution:
As per the information given in the question
Consideration offered for the Acquisition by Soare Inc. = $ 2,000,000
Book value of Net Assets of Sol Donuts = $ 800,000
Fair value of Net Assets of Sol Donuts = $ 1,100,000
The formula for calculating the value of goodwill / ( Capital reserve ) in this acquisition is as follows
= Consideration offered for the Acquisition by Soare Inc. – Fair value of Net assets of Sol Donuts
= $ 2,000,000 – $ 1,100,000
= $ 900,000
Thus value of goodwill in this acquisition = $ 900,000
The amount of goodwill to be recorded based on the offered acquisition price = $ 900,000
Sol Donuts has 6 stores in Portland, Oregon and Seattle, Washington. It has been in business...
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