Did the initial investment include a payment for goodwill

Reference no: EM132764717

Question: On January 1, 2020, Exile Company bought 40,000 shares of the available 200,000 voting common shares of Davis Corporation, a publicly traded firm. This acquisition provided Exile with significant influence. Exile paid $425,000 cash for the investment. At the time of the acquisition, Davis had assets of $2,350,000 and liabilities of $630,000. Asset values relected the fair market value except for capital assets that had a net book value of $250,000 and a fair market value of $360,000. These assets had a remaining useful life of five years. For 2020, Davis reprted net income of $430,000 and paid cash dividends of $100,000. Instructions: Assuming Exile is using the equity method for accounting for this investment answer the following

A) Did the initial investment include a payment for goodwill? Provide support for your answer.

Reference no: EM132764717

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