Thad Ltd.acquired 100% of the common shares of Zoe Co.for $560,000.At the time of acquisition,Zoe had the following:

In this acquisition,how much goodwill has been created?

Question

Thad Ltd.acquired 100% of the common shares of Zoe Co.for $560,000.At the time of acquisition,Zoe had the following:

In this acquisition,how much goodwill has been created?

Quizplus · Accepted Answer

Goodwill is the difference between the purchase price and the fair value of the net identifiable assets acquired. In this case, the fair value of Zoe's net identifiable assets is $539,000 ($80,000 + $200,000 + $135,000 + $19,000 + $105,000). The purchase price was $560,000. Therefore, goodwill is $21,000 ($560,000 - $539,000).

Thad LtdAcquired 100% of the Common Shares of Zoe Co