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13 March, 14:30

The balance sheet of Cattleman's Steakhouse shows assets of $86,700 and liabilities of $15,200. The fair value of the assets is $89,900 and the fair value of its liabilities is $15,200. Longhorn paid Cattleman's $82,620 to acquire all of its assets and liabilities. Longhorn should record goodwill on this purchase of:

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  1. 13 March, 14:36
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    Longhorn Goodwill=$7920

    Longhorn should record goodwill on this purchase of $7920.

    Explanation:

    Longhorn Goodwill=Price Paid to Acquire - Total fair Assets

    Total Fair Assets=Fair Value of Assets-Fair Value if Liabilities

    Total Fair Assets = $89,900-$15,200

    Total Fair Assets = $74,700

    Longhorn Goodwill=Price Paid to Acquire - Total fair Assets

    Longhorn Goodwill=$82,620-$74,700

    Longhorn Goodwill=$7920

    Longhorn should record goodwill on this purchase of $7920.
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