Compute the cost of goodwill purchased by golden

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Reference no: EM132757400

Golden paid €20 million to purchase Ryanair.com.

Suppose that Ryanair had the following summarized data at the time of the Golden acquisition (amounts in million euros):

Assets

Current Assets 10

Long Term Assets 22

Total Assets 32

Shareholders' Equity and Liabilities

Total Liabilities 25

Shareholders' Equity 7

Total Shareholders' Equity and Liabilities 32

Ryanair's long-term assets had a current market value of only €18 million.

Problem 1. Compute the cost of goodwill purchased by Golden.

Problem 2. Show on a transaction worksheet how Golden accounts for the purchase of Ryanair.

Problem 3. Explain how Golden will account for goodwill in the future.

Reference no: EM132757400

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