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Nutka1998 [239]
3 years ago
11

Kosher Pickle Company acquires all the outstanding stock of Midwest Produce for $12.5 million. The fair value of Midwest's asset

s is $8.5 million. The fair value of Midwest's liabilities is $1.3 million. Calculate the amount paid for goodwill
Business
1 answer:
Tems11 [23]3 years ago
6 0

Answer:

$5.3 million

Explanation:

Kosher pickle company acquires outstanding stock of Midwest produce for $12.5 million

Fair value of Midwest assets is $8.5 million

Fair value of Midwest liabilities is $1.3 million

The first step is to calculate the fair value of net identifiable assets

= $8.5 million-$1.3 million

=7.2 million

Therefore, the amount paid for goodwill can be calculated as follows

= $12.5 million-$7.2 million

= $5.3 million

Hence the amount paid for goodwill is $5.3 million

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