Mini-Exercise 6-5 Goodwill LO 9 Raider Co. recently acquired all of Lost Arc, In
ID: 2530475 • Letter: M
Question
Mini-Exercise 6-5 Goodwill LO 9 Raider Co. recently acquired all of Lost Arc, Inc.’s net assets in a business acquisition. The cash purchase price was $7.7 million. Lost Arc, Inc.’s assets and liabilities had the following appraised values immediately prior to the acquisition: land, $2.0 million; buildings, $3.7 million; inventory, $2.5 million; long-term notes payable, for which Raider Co. assumes payment responsibilities, $1.8 million. Required: How much goodwill will result from this transaction? (Enter your answers in whole dollars.)
Explanation / Answer
Purchase consideration 7.7 Net assets: Land 2 Buildings 3.7 Inventory 2.5 Long-term notes payable -1.8 6.4 Goodwill 1.3 Goodwill =$1300000