Question

In: Accounting

Jackson Browne acquires Jimmy Buffett company for $1,000,000. Jimmy Buffett company has the following assets and...

Jackson Browne acquires Jimmy Buffett company for $1,000,000. Jimmy Buffett company has the following assets and liabilities (measured at fair value).

Cash 200,000

Accounts Payable 75,000

Accounts Receivable 50,000

Inventory 200,000

Notes Payable 100,000

Unearned Revenue 50,000

Property, Plant and Equipment 300,000

How much Goodwill, if any, should Jackson Browne record related to the acquisition?

Expert Solution

Answer:

Goodwill is the excess payment made over the fair value of net assets of acquired as purchase

Consideration.

Good will =$1,000,000-$525,000=$475,000

Working:

Purchase Consideration = $1,000,000

Statement showing Net Assets as fallows

Cash	$ 200,000
Accounts Receivable	50,000
Inventory	200,000
Property, Plant and Equipment	300,000
Total Assets	750,000
Less:
Accounts payable	75,000
Notes Payable	100,000
Unearned Revenue	50,000
Net Assets	$ 525,000

ekkarill92 answered 1 year ago

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