Johnson Corporation acquired all of the outstanding common stock of Smith Corporation for $13,280,000 in cash. The book value of Smith’s net assets (assets minus liabilities) was $9,700,000. The fair values of all of Smith’s assets and liabilities were equal to their book values with the following exceptions: Book Value Fair Value Receivables $ 3,200,000 $ 2,810,000 Property, plant, and equipment 9,900,000 11,490,000 Intangible assets 390,000 1,580,000 Required: Calculate the amount paid for goodwill.
Johnson Corporation acquired all of the outstanding common stock of Smith Corporation for $13,280,000 in cash. The book value of Smith’s net assets (assets minus liabilities) was $9,700,000. The fair values of all of Smith’s assets and liabilities were equal to their book values with the following exceptions: Book Value Fair Value Receivables $ 3,200,000 $ 2,810,000 Property, plant, and equipment 9,900,000 11,490,000 Intangible assets 390,000 1,580,000 Required: Calculate the amount paid for goodwill.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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26. Johnson Corporation acquired all of the outstanding common stock of Smith Corporation for $13,280,000 in cash. The book value of Smith’s net assets (assets minus liabilities) was $9,700,000. The fair values of all of Smith’s assets and liabilities were equal to their book values with the following exceptions:
| Book Value | Fair Value | |||||
| Receivables | $ | 3,200,000 | $ | 2,810,000 | ||
| Property, plant, and equipment | 9,900,000 | 11,490,000 | ||||
| Intangible assets | 390,000 | 1,580,000 | ||||
Required:
Calculate the amount paid for
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