sume that an Investor purchases 100% of an investee company for $24 million in a transaction that qualifies as a business combination. follows: Receivables, Inventories, PPE, payables, and accruals $8 million 5 million esearch and development assets: Research projects in process at the investee company 6 million angible net assets: tangible assets: Patents, customer lists, trade name, software, etc. addition to the purchase price, the Investor also incurs acquisition-related costs amounting to $1.8 million for professional fees and the in urchase.
sume that an Investor purchases 100% of an investee company for $24 million in a transaction that qualifies as a business combination. follows: Receivables, Inventories, PPE, payables, and accruals $8 million 5 million esearch and development assets: Research projects in process at the investee company 6 million angible net assets: tangible assets: Patents, customer lists, trade name, software, etc. addition to the purchase price, the Investor also incurs acquisition-related costs amounting to $1.8 million for professional fees and the in urchase.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:Computation of goodwill
Assume that an investor purchases 100% of an investee company for $24 million in a transaction that qualifies as a business combination. The fair values of the identifiable net assets are
as follows:
Tangible net assets:
Receivables, inventories, PPE, payables, and accruals
$8 million
Intangible assets:
Patents, customer lists, trade name, software, etc.
5 million
Research and development assets: Research projects in process at the investee company 6 million
In addition to the purchase price, the Investor also incurs acquísition-related costs amounting to $1.8 million for professional fees and the internal allocation of overhead relating to the
purchase.
a. How much of the purchase price is assigned to Goodwill?
$4
million
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