Johnson Corporation acquired all of the outstanding common stock of Smith Corporation for $11,000,000 in cash. The book value of Smith's net assets (assets minus liabilities) was $7,800,000. 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 $1,100,000 9,400,000 1,200,000 $1,300,000 8,000,000 200,000 Receivables Property, plant, and equipment Intangible assets Required: Calculate the amount paid for goodwill.
Johnson Corporation acquired all of the outstanding common stock of Smith Corporation for $11,000,000 in cash. The book value of Smith's net assets (assets minus liabilities) was $7,800,000. 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 $1,100,000 9,400,000 1,200,000 $1,300,000 8,000,000 200,000 Receivables Property, plant, and equipment Intangible assets Required: Calculate the amount paid for goodwill.
Chapter20: Corporations: Distributions In Complete Liquidation And An Overview Of Reorganizations
Section: Chapter Questions
Problem 35P
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Transcribed Image Text:Johnson Corporation acquired all of the outstanding common stock of Smith Corporation for $11,000,000 in cash.
The book value of Smith's net assets (assets minus liabilities) was $7,800,000. 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
$1,100,000
9,400,000
1,200,000
$1,300,000
8,000,000
200,000
Receivables
Property, plant, and equipment
Intangible assets
Required:
Calculate the amount paid for goodwill.
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