Hoover Company acquired Burgess Company for $1,200,000 cash. The fair value of Burgess' assets was $1,040,000, and the company had liabilities of $60,000. How much goodwill did Hoover Company acquire in the purchase?

Question

Quizplus · Accepted Answer

Goodwill = Purchase price - Fair value of assets acquired - Liabilities assumed
Goodwill = $1,200,000 - $1,040,000 - $60,000
Goodwill = $100,000 - $220,000
Therefore, the amount of goodwill acquired by Hoover Company is $220,000.

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