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?

Question

Business

Adalynn Berg

2 December, 16:51

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?

+2

Answers (1)

Know the Answer?

Jayson Cisneros · Answer 1

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