The DOC Corporation with a book value of $20 million and a market value of $30 million has acquired the CIC Corporation with a book value of $6 million and a market value of $8 million at a price of $9 million.If the transaction is a purchase,will there be any goodwill,and if so,what is the amount of goodwill?
A)No goodwill; 0
B)Yes goodwill; 3
C)Yes goodwill; 1
D)Cannot be calculated with the information given

Question

Quizplus · Accepted Answer

Goodwill is calculated as the purchase price minus the fair market value of the net assets acquired. Here, the purchase price is $9 million and the market value of CIC's net assets is $8 million, resulting in goodwill of $1 million.

The DOC Corporation with a Book Value of $20 Million