Assuming that Hanson had no recorded goodwill prior to January 1, 2018, what would be the amount of goodwill appearing on Hanson' December 31, 2019 Consolidated Balance Sheet?
A) $75,000
B) $136,500
C) $195,000
D)$209,900

Question

Quizplus · Accepted Answer

Goodwill is calculated as the excess of the purchase price over the fair value of net assets acquired. Assuming that Hanson purchased Canada Chemical on January 1, 2018, for $1,200,000 and that the fair value of net assets acquired was $1,005,000, the amount of goodwill recognized on that date would be $195,000 ($1,200,000 - $1,005,000). Assuming no impairment, this amount would appear on Hanson's December 31, 2019 Consolidated Balance Sheet as the same amount of $195,000.

Assuming That Hanson Had No Recorded Goodwill Prior to January