Question

On March 31, 2021, Wolfson Corporation acquired all of the outstanding common stock of Barney Corporation for $17,800,000 in cash. The book values and fair values of Barney’s assets and liabilities were as follows:
Book Value Fair Value
Current assets $ 6,800,000 $ 8,300,000
Property, plant, and equipment 11,800,000 14,800,000
Other assets 1,080,000 1,580,000
Current liabilities 4,800,000 4,800,000
Long-term liabilities 6,800,000 6,300,000
Required:
1. Calculate the amount paid for goodwill.

Answer 1

Answer:

amount paid for good will = $ 4,220,000

Explanation:

check the attachment below on how i solved it

Answer 2

Answer:

Goodwill           4,120,000

Explanation:

The company will post the list of acquired asset and liaiblities assumed when doing the purchase of barney at their fair value.

The difference between the purchase and the net assets of Barney will be considered goodwill.

Current Assets 8,300,000 debit

PPE                  14,800,000 debit

Other Assets    1,580,000 debit

Goodwill           4,120,000  debit

     Curent Liab             4,800,000   credit

    Long term Liab         6,300,000  credit

    Cash                         17,800,000  credit