Patel Incorporated purchased Tauber Company for $950,000 cash. Patel assumed all
ID: 2536485 • Letter: P
Question
Patel Incorporated purchased Tauber Company for $950,000 cash. Patel assumed all of the liabilities of Tauber. Book values and fair values of acquired assets and liabilities were:
Book Value Fair Value
Current Assets: $130,000 $125,000
PP&E(net): $600,000 $750,000
Liabilities: $175,000 $175,000
Patel would record goodwill of:
Explanation / Answer
Calculate goodwill :
Current assets 125000 PP&E (net) 750000 Total assets 875000 Less: Liabilities -175000 Net current assets 700000 Less: Amount paid for purchase -950000 Goodwill 250000