Orlando Company acquired all of the shares of Tampa Company for $100. The fair values of Tampa Company's assets and liabilities at the time of acquisition were $200 and $120, respectively. On the consolidated balance sheet of Orlando Company, goodwill is:

Question

Quizplus · Accepted Answer

Goodwill is calculated as the purchase price minus the fair value of net assets acquired. Here, the purchase price is $100, and the net assets (assets minus liabilities) are $80 ($200 - $120). Therefore, goodwill is $100 - $80 = $20.

Orlando Company Acquired All of the Shares of Tampa Company