Question

Crane Company purchases Cullumber Company for $2390000 cash on January 1, 2021. The book value of Cullumber Company’s net assets, as reflected on its December 31, 2020 balance sheet is $1851000. An analysis by Crane on December 31, 2020 indicates that the fair value of Cullumber’s tangible assets exceeded the book value by $178500, and the fair value of identifiable intangible assets exceeded book value by $134000. How much goodwill should be recognized by Crane Company when recording the purchase of Cullumber Company? $539000 $360500 $226500 $0

Answer 1

Answer:

$226,500

Explanation:

The computation of the goodwill is shown below:

Goodwill = cash paid - book value of net assets -  tangible assets exceeded the book value - fair value of identifiable intangible assets exceeded book value

= $2,390,000 - $1,851,000 - $178,500 - $134,000

= $226,500

We simply applied the above formula so that the goodwill amount could arrive