The Hoover Company acquired the Burgess Company for $1,200,000 cash. The fair value of Burgess's assets was $1,040,000, and the company had liabilities of $60,000. How much goodwill will be recorded in connection with the acquisition?

Question

Quizplus · Accepted Answer

Goodwill is calculated as the purchase price minus the fair value of net assets (assets minus liabilities). Here, goodwill = $1,200,000 - ($1,040,000 - $60,000) = $1,200,000 - $980,000 = $220,000.

The Hoover Company Acquired the Burgess Company for $1,200,000 Cash