Mainline Produce Corporation acquired all the outstanding common stock of Iceber

Question

Mainline Produce Corporation acquired all the outstanding common stock of Iceberg Lettuce Corporation for $30,000,000 in cash. The book values and fair values of Iceberg’s assets and liabilities were as follows: Book Value Fair Value Current assets $ 11,400,000 $ 14,400,000 Property, plant, and equipment 20,200,000 26,200,000 Other assets 3,400,000 4,400,000 Current liabilities 7,800,000 7,800,000 Long-term liabilities 13,200,000 12,200,000 Required: Calculate the amount paid for goodwill. (Enter your answer in millions.)

Explanation / Answer

Fair value Current Assets     14,400,000 Property Plant & Equipment     26,200,000 Other assets        4,400,000 Less: Current liabilities     (7,800,000) Less: Long term liabilities (12,200,000)     25,000,000 Less: Amount paid     30,000,000 Goodwill $        5,000,000 Goodwill (million) $                        5

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