Question

On March 31, 2021, Wolfson Corporation acquired all of the outstanding common stock of Barney Corporation for $17,100,000 in cash. The book values and fair values of Barney’s assets and liabilities were as follows:

	Book Value			Fair Value
Current assets	$	6,100,000		$	7,600,000
Property, plant, and equipment		11,100,000			14,100,000
Other assets		1,010,000			1,510,000
Current liabilities		4,100,000			4,100,000
Long-term liabilities		6,100,000			5,600,000

Required:
Calculate the amount paid for goodwill.
  

Answer 1

Working Notes:
	CALCULATION OF NET ASSETS ACQUIRED ON BUSINESS PURCHASE
	Particulars	Amount	Amount
	Current Assets	$               76,00,000
	Property Plant & Equipment	$           1,41,00,000
	Other Assets	$               15,10,000
	Total Assets		$ 2,32,10,000
	Less: Liabilities
	Current Liabilities	$               41,00,000
	Long Term Liabilities	$               56,00,000
			$    97,00,000
	Net Assets Acquired		$ 1,35,10,000
Solution:
	CALCULATION OF THE GOODWILL ON BUSINESS PURCHASE
	Goodwill                                     =	Value of Business Purchase	"-"	Net Assets
	Goodwill                                     =	$           1,71,00,000	"-"	$            1,35,10,000
	Goodwill                                     =	$               35,90,000
	Answer = Amount Paid for Goodwill = $ 3,590,000