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Goodwill LO P4 Robinson Company purchased Franklin Company at a price of $3,780,000
Goodwill LO P4 Robinson Company purchased Franklin Company at a price of $3,780,000. The fair market value of the net assets purchased equals $2,850,000. 1. What is the amount of goodwill that Robinson records at the purchase date? 2. Does Robinson amortize goodwill at year-end? 3. Robinson believes that its employees provide superior customer service, and through their efforts, Robinson believes it has created $1,460,000 of goodwill. Should Robinson Company record this goodwill? Complete this question by entering your answers in the tabs below.
Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What is the amount of goodwill that Robinson records at the purchase date? Goodwill Required 2
Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Does Robinson amortize goodwill at year-end? Does Robinson amortize goodwill at year-end?
Expert Solution
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1. Goodwill = Consideration paid - Fair value of net assets received Goodwill = $3780000 - $2850000 Goodwill= $930000 |
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2. No (Goodwill is not amortized unlike other intangible assets) (Goodwill is subject to impairment test at yearend) |
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3. No (Internally generated goodwill is not recorded) (Only purchased goodwill is recorded in Financial statement. |
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