Question

On September 1, 2017, Bridgeport Corporation acquired Aumont Enterprises for a cash payment of $800,000. At the time of purchase, Aumont’s balance sheet showed assets of $630,000, liabilities of $180,000, and owners’ equity of $450,000. The fair value of Aumont’s assets is estimated to be $760,000. Compute the amount of goodwill acquired by Bridgeport.

Answer 1

$220,000

Step-by-step explanation:

Net Amount of assets taken:

= Fair value of assets - Liabilities taken over

= $760,000 - $180,000

= $580,000

Value of Goodwill acquired by Bridgeport:

= Purchase consideration - Net Amount of assets taken

= $800,000 - $580,000

= $220,000

Therefore, the amount of goodwill acquired by Bridgeport is $220,000.