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 $41,000,000 in cash. The book values and fair values of Iceberg's assets and liabilities were as follows: Book ValueFair Value Current assets Property, plant, and equipment Other assets Current liabilities Long-term liabilities $15,000,000 $ 18,000,000 35,000,000 6,000,000 9.400,000 9,400,000 15.600,00014.600.000 29,000,000 5,000,000 Required: Calculate the amount paid for goodwill. (Enter your answer in millions (l.e. 5,000,000 should be entered as 5).) Amount paid for goodwi million

Explanation / Answer

Net Fair value of the company at the time of Purchase=

= Current Assets + Property Plant and Equipment + Other Assets - Current Liablities - Long Term Liablities

= $ 18,000,000 + $ 35,000,000 + $ 6,000,000 - $ 9,400,000 - $ 14,600,000

=$ 35,000,000 or 35 Million

Amount Paid for Goodwill = Cash paid - Net FAirvalue of the company

= 41 Million - 35 Million

= 6 Million

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