Question

Beaver Corporation purchased all of the outstanding common stock of Cole Corporation for$2,000,000 in cash.The book value of Cole's net assets was$1,200,000.The fair
values of all of Cole's assets and liabilities were equal to their book values with the following exceptions:Receivables with book value of$400,000 but fair value of$300,000;
Property,plant and equipment with book value of$1,500,000 but fair value of$1,800,000;Intangible assets with book value of$100,000 but fair value of$250,000.The amount
paid for goodwill would be:

Answer 1

Particulars	Amount (in $)
Book value of Net Assets	$1,200,000
Add : Fair Value of Net Assets
- Receivables             ($300,000 (-) $400,000)	($100,000)
- Property, plant, and equipment           ($1,800,000 (-) $1,500,000)	$300,000
- Intangible assets            ($250,000 (-) $100,000)	$150,000
Total value of Assets	$1,550,000
Particulars	Amount (in $)
Purchase Consideration	$2,000,000
Less : Total value of Assets	($1,550,000)
Goodwill	$450,000