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    Calculating goodwill assets

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    Acme Corporation is buying all the assets and assuming all the liabilities of Stark Inc. The following information is available for Stark Inc. at the date of the purchase:

    Accounts Receivable 300,000
    Inventory 100,000
    Equipment 200,000
    Accumulated Depreciation 80,000
    Land 300,000

    Accounts payable 40,000
    Wages Payable 10,000
    Note Payable 100,000
    Common Stock 300,000
    Retained Earnings 270,000

    The inventory is worth $60,000, the land is worth $400,000 and the equipment is worth $300,000. Everything else is worth its book value. Acme Corporation will pay $1,000,000 for Stark Inc. How much of the purchase price will Acme Corporation debit to goodwill?

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    Solution Preview

    Accounts Receivable 300,000
    Inventory 60,000
    Equipment ...

    Solution Summary

    The expert calculates goodwill assets. Acme Corporation assets are examined.