Question

Tendon Corporation pays 100,000,000 for Valley Company. Valley's book value is2,000,000, and its assets and liabilities are reported at amounts approximating fair value. It has the following unreported intangibles: In-process research development 3,000,000, Assembled workforce25,000,000, Potential contracts with prospective customers 10,000,000, Brand names8,000,000. What is the goodwill reported for this acquisition?

Answer 1

The goodwill reported for this acquisition is $98,000,000.

Step-by-step explanation:

The goodwill reported for this acquisition is the difference between the purchase price and the fair value of Valley Company's net assets. In this case, the purchase price is $100,000,000, and the fair value of Valley Company's net assets is $2,000,000. Therefore, the goodwill reported for this acquisition is $98,000,000 ($100,000,000 - $2,000,000).