Hi Jamal,
Goodwills equals the excess of the fair value of the consideration transferred over the fair value of the net of Identifiable assets acquired and liabilities assumed.
Consideration transferred: 15000 shares x $45 = $675000
minus : (add all assets of Pauley's accounts fair value and deduct the liability) = $601400
Goodwill $73600
Thanks
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Siraj Paneru
Accountant
Revere MA
United States
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Original Message:
Sent: 02-21-2020 02:34 PM
From: Syed Yousuf Jamal
Subject: Goodwill
Mikey Corporation takes control over Pauley Corporation on July 1. The book value and fair value of Pauley's accounts on that date (prior to creating the combination) follow, along with the book value of Mikey's accounts (negative numbers show credit balances):
| Mikey Book Values | Pauley Book Values | Pauley Fair Values |
---|
Revenue | $ 391,000 | $ 203,400 | |
Expenses | 266,000 | 125,200 | |
Retained earnings (1/1) | 203,000 | 234,800 | |
Cash and receivables | 219,000 | 93,900 | $ 93,900 |
Inventory | 297,000 | 227,000 | 273,000 |
Patented technology (net) | 360,000 | 281,700 | 313,000 |
Land | 630,000 | 313,000 | 352,000 |
Building and equipment (net) | 156,500 | 117,500 | 117,500 |
Liabilities | 845,100 | 563,400 | 548,000 |
Common stock | 469,500 | 109,550 | |
Additional paid-in capital | 15,700 | 47,000 | |
Assume that Mikey issues 15,000 shares of common stock with a $10 par value and a $45 fair value to obtain all of Pauley's outstanding stock. How much goodwill should be recognized?
| $205,300 |
| No goodwill |
| $675,000 |
| $73,600 |
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Syed Yousuf Jamal
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