Question

a company has the following expenditures during the year: advertising $ 750,000 employee training 93,750 customer outreach and consultation 656,250 the company believes that these efforts have increased the fair value of the entire company by $187,500. how much goodwill can the company recognize at the end of the year associated with these expenditures? multiple choice $1,500,000 $0 $93,750 $187,500

Answer 1

The company can recognize a goodwill of $187,500 associated with these expenditures.

The company can recognize a goodwill of $187,500 associated with these expenditures.

Step 1: Add up the total expenditures: $750,000 + $93,750 + $656,250 = $1,500,000

Step 2: Calculate the percentage increase in fair value: $187,500 / $1,500,000 = 0.125

Step 3: Multiply the total expenditures by the percentage increase to find the goodwill: $1,500,000 * 0.125 = $187,500

Therefore, the company can recognize a goodwill of $187,500 at the end of the year associated with these expenditures.