Kenora Inc.made an offer for $10,000,000 to purchase Churchill Corporation.At the time of the offer Churchill Corporation had net assets with a book value of $6,500,000 and a market value of $8,200,000.For various reasons the purchase did not take place.How much is the value of goodwill Churchill can now report on their balance sheet?

Question

Quizplus · Accepted Answer

Goodwill is only recognized when one company purchases another company for more than the fair value of its net assets. Since the purchase did not take place, there is no goodwill to report on Churchill Corporation's balance sheet.