Question

11. Sopposed Cic Delivery pays $66 milliom to buy Lyn Star Overnight. Lyn Star Overnight assets are valued at 72 million and its liabilities total 23 million. How much goodwill did Cic Delivery purchase in its acquisition of Lyn Star Overnight?

Answer 1

$17 million

Step-by-step explanation:

In order to compute the cost of the goodwill, first, we have to compute the fair value of the net asset which is shown below:

The fair value of net asset = The market value of Lyn Star Overnight assets - the market value of Lyn Star Overnight liabilities

= $72 million - $23 million

= $49 million

And, the purchase value of Lyn Star Overnight is $66 million

So, the goodwill would be

= $66 million - $49 million

= $17 million