Orlando Company acquired all of the shares of Tampa Company for $100 cash.At the time of the acquisition,the fair values of Tampa Company's assets were $200.At the time of acquisition,the fair values of Tampa Company's liabilities were $120.On the date of acquisition,what is the amount of goodwill on the consolidated balance sheet?

Question

Quizplus · Accepted Answer

Goodwill is calculated as the purchase price ($100) minus the fair value of net assets acquired (assets $200 - liabilities $120 = $80). Therefore, goodwill is $100 - $80 = $20.

Orlando Company Acquired All of the Shares of Tampa Company