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Calculate the amount paid for goodwill

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Question - Johnson Corporation purchased 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

Receivables

$1,300,000

$1,100,000

Property, plant, and equipment

8,000,000

9,400,000

Intangible assets

200,000

1,200,000

Required: Calculate the amount paid for goodwill.

Reference no: EM131884435

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