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:

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.