Compute the amount of acquired Goodwill, including contingent earnings and bargain purchase Assume that you are charged with assigning fair values related to a $3,800,000 acquisition. You determine that the fair value of the net identifiable tangible assets is $1,850,000. You also conclude that the purchase included a Customer List with a fair value at $340,000.

a. How much Goodwill will you record in this acquisition? $Answer

b. Continuing from part (a), now also assume that the purchase and sale agreement requires the payment of an additional $925,000 if the subsidiary achieves a certain level of earnings. You estimate the fair value of that contingent earnings clause in the agreement to be $220,000. How does this additional information affect your computation of Goodwill?

The amount of Goodwill recorded is $Answer

c. This part of the exercise is independent of parts (a) and (b). Assume that the purchase price is $3,800,000 and that fair value of the net identifiable tangible assets is $1,850,000. You also conclude that the purchase included a Customer List that you value at $640,000 and a Patent valued at $1,900,000. How much Goodwill will you record in this acquisition?

The amount of Goodwill recorded is: $Answer