Assuming the fair value of Frosty's net assets is $ 10.2 million, and Casper acquires a 75% share, goodwill can be calculated as
A) $ 1,550,000.
B) $ 1,243,000.
C) $ 1,000,000.
D) $ 750,000.

Question

Quizplus · Accepted Answer

Goodwill is calculated as the excess of the purchase consideration over the fair value of the net assets acquired. If Casper acquires a 75% share, the purchase consideration for this share is 75% of $10.2 million = $7.65 million. Assuming the purchase price for this 75% share is higher than $7.65 million (which is not provided but is implied since goodwill exists), and given the options, the only way to arrive at the correct answer is by understanding the concept. Without the actual purchase price, we can't calculate the exact goodwill, but based on the options provided, $1,550,000 as goodwill implies a specific purchase price scenario that aligns with how goodwill is typically calculated.

Assuming the Fair Value of Frosty's Net Assets Is