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Shaw's Land has a fair value of $200,000, while its Building has a fair value of $300,000. Shaw's Liabilities have a fair value of $75,000. Brooks Company obtains all of the outstanding shares of Shaw for $750,000 cash. In the financial statements prepared immediately after the business combination, what is the amount of Goodwill using the purchase method?$75,000$100,000$125,000$250,000$65,000

Respuesta :

Answer:

$250,000

Explanation:

Provided information we have,

Value of total assets = Fair Value of land + Fair Value of Building

= $200,000 + $300,000 = $500,000

Total amount paid for acquiring 100% shares of Shaw = $750,000

Value of goodwill in case of acquisition = Total price of acquisition - Fair value of assets acquired

= $750,000 - $500,000 = $250,000

Note: Value of liabilities is not deducted, as the excess value paid over gross assets fair value is what we call goodwill.

Thus, correct answer

$250,000

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