Find the goodwill recorded in transaction

Reference no: EM131939866

Question: Assume a zero tax rate for this problem. Spicer, Inc. is a private company whose 50 million outstanding common shares were estimated to have a fair value of $1 per share and had a par value of $0.20 per share immediately prior to the following transaction. On January 31, 2016, Spicer acquired all of the stock of Flynn, Inc. for 10 million newly issued shares of Spicer stock. Acquisition costs paid were $500,000. At the date of acquisition, Flynn had historical basis of net assets of $2 million and fair value of net assets of $3 million, goodwill recorded in this transaction should be:

a. $7.0 million

b. $7.5 million

c. $8.0 million

d. $10 million

e. None of the above

Reference no: EM131939866

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