Given Information:
Fair value of consideration paid = $15 million
Fair value of Midwest's assets=$11.9 million
Fair value of Midwest's liabilities=$1.7 million
Required Information:
Amount paid for goodwill = ?
Answer:
Amount paid for goodwill = 4.8 million
Explanation:
The amount of goodwill can be calculated by
Amount of goodwill = Fair value of consideration paid - Fair value of net identifiable assets
The Fair value of net identifiable assets is found by
Fair value of net identifiable assets = Fair value of Midwest's assets - Fair value of Midwest's liabilities
Fair value of net identifiable assets = 11.9 - 1.7
Fair value of net identifiable assets = 10.2 million
Therefore, the amount paid for goodwill is
Amount paid for Goodwill = 15 - 10.2
Amount paid for Goodwill = 4.8 million
