On January 1, 20X4, Sheldon Company paid $750,000 cash for 100% of the outstanding common stock of Mullen Company; Mullen's stockholders equity on the date of acquisition was $550,000. The current market value of Mullen's net assets was $70,000 in excess of their book value. What was the amount of goodwill purchased by Sheldon Company?

Question

Quizplus · Accepted Answer

Calculation: Goodwill ($130,000) = Amount paid ($750,000) - Fair value of acquired net assets [Stockholders' equity ($550,000) + Net asset differential ($70,000)].

On January 1, 20X4, Sheldon Company Paid $750,000 Cash for 100