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24 October, 04:31

New Harvest Bakery acquired all the outstanding common stock of Red Rock Bakery for $70,300 in cash. The book values and market values of Red Rock's assets and liabilities were as follows:

Book Value Fair Value

Current assets $22,500 $22,800

Property, plant, and equipment 40,100 52,100

Other assets 4,800 5,400

Current liabilities 10,600 15,100

Long-term liabilities 22,400 20,900

Calculate the amount paid for goodwill.

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  1. 24 October, 07:19
    0
    good wil 26,000

    Explanation:

    acquisition 70,300 cash

    asset book value

    22,500 + 40,100 + 4,800 = 67,400

    Liab book

    10,600 + 22,400 = 33,000

    net book value 34,400

    asset fair value

    22,800 + 52,100 + 5,400 = 80,300

    liab fair

    15,100 + 20,900 = 36,000

    net fair value 44,300

    70,300 - 44,300 = 26,000

    The assets and laib enter New Haverst Bakery account as his fair value.

    The goodwill will be the difference betwene this fair value and the amount of the acquisition.
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