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Nadine' Home Fashions has $2.12 million in net working capital. The firm has fixed assets with a book value of $31.64 million and a market value of $33.9 million. The Home Center is acquiring Nadine's for $37.5 million in cash. The acquisition will be recorded using the purchase accounting method. What is the amount of goodwill that the Home Center will record on its balance sheet as a result?

Respuesta :

Tundexi

Answer:

$1.48 million

Explanation:

Particulars                                           Amount

Net working capital                            $2.12 million

Add: Market value of fixed assets     $33.90 million

Total fair value                                    $36.02 million

Goodwill =  Purchase price of N Home Fashions  - Total fair value of N Home Fashions  

= $37.5 million - $36.02 million

= $1.48 million

Therefore, the amount of goodwill is $1.48 million.

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