Naples Company acquired all of the shares of Tampa Company for $80 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?
A) $0
B) $20
C) $80
D) $100

Question

Quizplus · Accepted Answer

Goodwill is the excess of the purchase price over the fair value of the net assets acquired. In this case, the purchase price is $80, the fair value of the assets is $200, and the fair value of the liabilities is $120. Therefore, the goodwill is $200 - $120 - $80 = $0.

Naples Company Acquired All of the Shares of Tampa Company