Question

Axiom Corporation reported the book value of its net assets at $600,000 when Zebra Corporation acquired 100 percent ownership. The fair value of Axiom's net assets was determined to be $900,000 on that date. What amount of goodwill will be reported in consolidated financial statements presented immediately following the combination if Zebra paid $950,000 for the acquisition

Answer 1

$50,000

Step-by-step explanation:

Goodwill is the excess of purchase consideration over the net assets of the business acquired.

Purchase consideration in this case is $950,000

The net assets =fair value of assets-fair value of liabilities

The fair value of net assets is already computed at $900,000 as provided in the question.

Goodwill=$950,000-$900,000=$50,000

Ultimately, the excess of purchase consideration over fair of net assets of the acquired business is $50,000