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25 January, 00:48

Burrough Corporation paid $80,000 to acquire all of Helyar Company's net assets. Helyar reported assets with a book value of $60,000 and fair value of $98,000 and liabilities with a book value and fair value of $23,000 on the date of combination. Burrough also paid $3,000 to a search firm for finder's fees related to the acquisition. What amount will be recorded as goodwill by Burrough Corporation while recording its investment in Helyar?

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  1. 25 January, 00:58
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    Answer: the goodwill is $5000

    Explanation:

    We don't take into account $60,000 because we are going to use the fair value or the reasonable price.

    Net assets = Assets-liabilities

    Net assets = $98,000 - $23,000

    Net assets = $75,000

    Burrough Corporation pay $. 80,000 (We don't take into account $3000 paid to another firm)

    So the goodwill pay is $80,000-$75000 = $5,000
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