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Johnston Mfg. is purchasing Delta Tools for $21.5 million in cash. The fixed assets of Delta Tools were recently appraised at $16.9 million. In addition,
Johnston Mfg. is purchasing Delta Tools for $21.5 million in cash. The fixed assets of Delta Tools were recently appraised at $16.9 million. In addition, Delta Tools has $2.6 million in working capital and no debt. Johnston Mfg. will use the purchase accounting method to record this acquisition. What is the amount of the goodwill that will be shown on the books of Johnston Mfg. after the acquisition? $2.0 million
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