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12 July, 20:21

On March 31, 2021, Wolfson Corporation acquired all of the outstanding common stock of Barney Corporation for $17,500,000 in cash. The book values and fair values of Barney's assets and liabilities were as follows: Book Value Fair Value Current assets $ 6,500,000 $ 8,000,000 Property, plant, and equipment 11,500,000 14,500,000 Other assets 1,050,000 1,550,000 Current liabilities 4,500,000 4,500,000 Long-term liabilities 6,500,000 6,000,000

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  1. 12 July, 20:23
    0
    Amount paid for goodwill = $3950000

    Explanation:

    given data

    outstanding common stock = $17,500,000

    book values fair values

    Current assets $6,500,000 $8,000,000

    Property plant and equipment 11,500,000 14,500,000

    Other assets 1,050,000 1,550,000

    Current liabilities 4,500,000 4,500,000

    Long-term liabilities 6,500,000 6,000,000

    to find out

    Calculate the amount paid for goodwill

    solution

    we get here first Net fair value of assets acquired that is here

    Net fair value of assets = Current assets + Property plant and equipment + Other assets - Current liabilities - Long-term liabilities ... 1

    put here value we get

    Net fair value of assets = 8,000,000 + 14,500,000 + 1,550,000 - 4,500,000 - 6,000,000

    Net fair value of assets = 13550000

    and

    Amount paid for goodwill here

    Amount paid for goodwill = outstanding common stock - Net fair value of assets ... 2

    put here value

    Amount paid for goodwill = $17,500,000 - 13550000

    Amount paid for goodwill = $3950000
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