Question

The balance sheet of Flo's Restaurant showed total assets of 340,000, liabilities of 96,000, and stockholders equity of 294,000. An appraiser estimated the fair value of the restaurant assets at 390,000. If Alice company pays 465,000 cash for the restaurant what is the amount of Goodwill?

a.151,000

b.171000

c. 75,000

d. 125,000

Answer 1

	Fair value of assets aquired	$390,000
	Less: Liabilities	$96,000
	Fair value of net assets	$294,000
	Consideration paid	$465,000
	Goodwill	$171,000	(465000-294000)