Othello Corporation purchases Shakespeare Inc. for $3.5 M. Shakespeare has the following assets all recorded at cost: The fair value of the assets is $2,350,000 and Othello also assumes $600,000 of debt from Shakespeare.
Instructions
Determine if there is any goodwill related to Othello's purchase of Shakespeare and if so what is the value of the goodwill. Show your work. Where is goodwill captured on the financial statements?

Question

Othello Corporation purchases Shakespeare Inc. for $3.5 M. Shakespeare has the following assets all recorded at cost:  The fair value of the assets is $2,350,000 and Othello also assumes $600,000 of debt from Shakespeare.
Instructions
Determine if there is any goodwill related to Othello's purchase of Shakespeare and if so what is the value of the goodwill. Show your work. Where is goodwill captured on the financial statements?

Quizplus · Accepted Answer

The Answer of Othello Corporation purchases Shakespeare Inc. for $3.5 M. Shakespeare has the following assets all recorded at cost:  The fair value of the assets is $2,350,000 and Othello also assumes $600,000 of debt from Shakespeare.
Instructions
Determine if there is any goodwill related to Othello's purchase of Shakespeare and if so what is the value of the goodwill. Show your work. Where is goodwill captured on the financial statements?

Othello Corporation Purchases Shakespeare Inc