New Harvest Bakery acquired all the outstanding common stock of Red Rock Bakery for $70,300 in cash. The book values and market values of Red Rock's assets and liabilities were as follows:

Book Value Fair Value

Current assets $22,500 $22,800

Property, plant, and equipment 40,100 52,100

Other assets 4,800 5,400

Current liabilities 10,600 15,100

Long-term liabilities 22,400 20,900

Calculate the amount paid for goodwill.

good wil 26,000

Explanation:

acquisition 70,300 cash

asset book value

22,500 + 40,100 + 4,800 = 67,400

Liab book

10,600 + 22,400 = 33,000

net book value 34,400

asset fair value

22,800 + 52,100 + 5,400 = 80,300

liab fair

15,100 + 20,900 = 36,000

net fair value 44,300

70,300 - 44,300 = 26,000

The assets and laib enter New Haverst Bakery account as his fair value.

The goodwill will be the difference betwene this fair value and the amount of the acquisition.