Question

Pro-tech Software acquired all of the outstanding stock of Reliable software for $14 million. The book value of Reliable's net assets( assets minus liabilities) was $8.3 million. The fair values of Reliable's assets and liabilities equaled their book values with the exception of certain intangible assets whose fair values exceeded book values by $2.5 million. Calculate the amount paid for goodwill.

Answer 1

Answer:

$ 3,200,000

Explanation:

Calculation for the amount paid for goodwill.

Goodwill = $ 14,000,000 - ($8,300,000 + $ 2,500,000)

Goodwill = $ 14,000,000 -$10,800,000

Goodwill= $ 3,200,000

Therefore the amount paid for goodwill is $ 3,200,000