Final answer:
To determine the reported goodwill for the acquisition of Hanna Corporation by Gigo Company, the book value of Hanna is adjusted for overvalued plant and equipment (-8,000,000) and added unreported intangibles (+25,000,000). The adjusted book value of 27,000,000 is then subtracted from the acquisition cost of 100,000,000, resulting in reported goodwill of 73,000,000.
Step-by-step explanation:
To calculate the amount of goodwill reported for the acquisition of Hanna Corporation by Gigo Company, several steps must be followed. First, we need to adjust the book value of Hanna Corporation for any overvalued or undervalued assets.
Hanna's book value is initially given as 10,000,000. Since the plant and equipment is overvalued by 8,000,000, we subtract this amount from the book value. Additionally, we add the unreported intangibles, valued at 25,000,000, to the book value. The adjusted book value is therefore:
Adjusted book value = Initial book value - Overvaluation + Fair value of intangibles
= 10,000,000 - 8,000,000 + 25,000,000
= 27,000,000
Now we compare the adjusted book value to the acquisition cost to determine the goodwill:
Goodwill = Acquisition cost - Adjusted book value
= 100,000,000 - 27,000,000
= 73,000,000
Therefore, the goodwill reported for this acquisition is 73,000,000.