# On March 31, 2016, Wolfson Corporation acquired all of the outstanding common stock of Barney...

On March 31, 2016, Wolfson Corporation acquired all of the outstanding common stock of Barney Corporation for $17,000,000 in cash. The book values and fair values of Barney's assets and liabilities were as follows:  Book Value Fair Value Current assets$6,000,000 $7,500,000 Property, plant, and equipment$11,000,000 $14,000,000 Other assets$1,000,000 $1,500,000 Current liabilities$4,000,000 $4,000,000 Long-term liabilities$6,000,000 $5,500,000 Calculate the amount paid for goodwill. ## Goodwill: In financial accounting, goodwill refers to an intangible asset that is created when a business acquires another business entity. Goodwill is the difference between the price paid for the business and its market value. ## Answer and Explanation: 1 Total fair value of assets = Current assets + Property, plant, and equipment + Other assets Total fair value of assets =$7,500,000 + $14,000,000 +$1,500,000

Total fair value of assets = $23,000,000 Total fair value of liabilities = Current liabilities + Long-term liabilities Total fair value of liabilities =$4,000,000 + $5,500,000 Total fair value of liabilities =$9,500,000

Fair value of net assets = Total fair value of assets - Total fair value of liabilities

Fair value of net assets = $23,000,000 -$9,500,000

Fair value of net assets = $13,500,000 Goodwill = Amount paid to acquire the common stock - Fair value of net assets Goodwill =$17,000,000 - $13,500,000 Goodwill =$3,500,000

What Are Intangible Assets? - Definition & Types

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Chapter 9 / Lesson 12
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Determine how to separate intangible assets from tangible assets. Intangible assets are those that include goodwill, patents, and copyrights. Also find out more about how to classify an intangible asset as definite or indefinite.