Goodwill (Learning Objective 6) 10–15 min.

Dillon, Corp., aggressively acquired other companies. Assume that Dillon, Corp., purchased Simmons, Inc., for $16 million cash. The market value of Simmons’s assets is

$22 million, and it has liabilities with a market value of $8 million.

Requirements 1. Compute the cost of goodwill purchased by Dillon, Corp.

2. Record the purchase of Simmons, Inc., by Dillon, Corp.

AppendixLO1