L Ltd acquired the business of M Ltd for a cash payment of $750 000.The carrying amount of M Ltd's assets at the time of purchase was $410 000 while the independent fair value was $630 000.There were no liabilities.What is the value of the purchased goodwill recorded by L Ltd?

Question

Quizplus · Accepted Answer

The purchased goodwill is the difference between the purchase price and the fair value of the net assets acquired. In this case, the purchase price is $750,000, the carrying amount of the net assets is $410,000, and the fair value of the net assets is $630,000. Therefore, the purchased goodwill is $750,000 - $630,000 = $120,000.

L Ltd Acquired the Business of M Ltd for a Cash