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Example 4: ABC Co. paid 190,000 BD to purchase the net assets of (Y) Company. The balance sheet of (Y) company at the acquisition
Example 4: ABC Co. paid 190,000 BD to purchase the net assets of (Y) Company. The balance sheet of (Y) company at the acquisition day as follow: Assets Cost Cash 10,000 Receivables 15,000 Inventories 80,000 Equipment 80,000 Total 185,000 Liabilities and Equities Accounts payable 15,000 Common stock 110,000 Retained earnings 60,000 185,000 Total Instruction: 1- Calculate the goodwill if the fair market value of the assets exceeds its net book value of $20,000:
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