3 Johnson Corporation acquired all of the outstanding common stock of Smith Corp

Question

3 Johnson Corporation acquired all of the outstanding common stock of Smith Corporation for $11,720,000 in cash. The book value of Smith's net assets (assets minus liabilities) was $8,400,000. The fair values of all of Smith's assets and liabilities were equal to their book values with the following exceptions 0.85 points Receivables Property, plant, and equipment Intangible assets Book Value Fair Value $1,900,000 1,640,000 10,060,000 1,320,000 8,600,000 260,000 Skipped Required: Calculate the amount paid for goodwill. eBook Goodwill Ask

Explanation / Answer

Consideration exchanged 11,720,000 Less fair value of net assets:    Book value of net assets        8,400,000    Plus: Fair value in excess of book value:           Property, plant, & equipment        1,460,000           Intangible assets        1,060,000     Less: Book value in excess of fair value:           Receivables          (260,000) 10,660,000 Goodwill     1,060,000

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