On August 1, 2017, Western Corporation acquired Orbit, Inc. for
a cash payment of $2.20 million. At the time of purchase, Orbit’s
balance sheet showed assets of $4,400,000, liabilities of
$2,650,000, and owners’ equity of $1,750,000. The fair value of
Orbit’s identifiable assets is estimated to be $4,300,000.
Compute the amount of goodwill acquired by Western.
Value assigned to goodwill |
Goodwill = consideration paid - fair value of net assets
= $2200000 - $1650000
= $550000
where,
fair value of net assets = fair value of assets - fair value of liabilities
= $4300000 - $2650000 = $1650000
On August 1, 2017, Western Corporation acquired Orbit, Inc. for a cash payment of $2.20 million....
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