Mark Company acquired Jackson Company for $2,000,000 cash. At that time, the fair value of recorded assets and liabilities was $

Question

2 years ago

10

Mark Company acquired Jackson Company for $2,000,000 cash. At that time, the fair value of recorded assets and liabilities was $

1,500,000 and $250,000, respectively. Jackson also had unrecorded copyrights valued at $100,000 and its direct costs related to the acquisition were $50,000. What was the amount of the goodwill related to the acquisition?

Business

1 answer:

fredd [130] · Answer 1 · 2022-09-02T18:09:06+03:00

Answer: $600,000

Explanation:

The amount of the goodwill related to the acquisition will be calculated thus:

Acquisition price = $2,000,000

The net assets will be:

= Assets + Copyrights - Liabilities

= $1,500,000 + $150,000 - $250,000

= 1,400,000

Goodwill will then be calculated as:

= acquisition price - net assets

= $2000000 - $1400000

= $600,000