During 2019,Manning Corporation purchased 100% of the outstanding voting common stock shares of Brady Corporation for $4.0 million.Brady's assets had a book value of $5.0 million and fair value of $6.5 million.The book value as well as fair value of Brady's liabilities equaled $3.2 million.How much was paid for goodwill?
A)$0.
B)$2,200,000.
C)$700,000.
D)$1,000,000.

Question

Quizplus · Accepted Answer

Goodwill is calculated as the purchase price minus the fair value of net identifiable assets. The fair value of Brady's net assets is $6.5 million (assets) - $3.2 million (liabilities) = $3.3 million. The purchase price was $4.0 million, so goodwill is $4.0 million - $3.3 million = $700,000.

During 2019,Manning Corporation Purchased 100% of the Outstanding Voting Common