The Harlow Company purchased the Hampton Company for $600,000 cash. The fair market value of Hampton's assets was $520,000 and the company had liabilities of $30,000. What amount of goodwill should Harlow record related to the purchase of Hampton Company?

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Quizplus · Accepted Answer

The amount of goodwill is calculated as the excess of the purchase price over the fair market value of the acquired assets net of liabilities. In this case, the purchase price is $600,000, the fair market value of the assets is $520,000, and the liabilities are $30,000. Therefore, the amount of goodwill is $600,000 - ($520,000 - $30,000) = $110,000.

The Harlow Company Purchased the Hampton Company for $600,000 Cash