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Baine Company purchased Vera Company at a price of $500,000. The fair value of the net assets purchased equals $420,000. Compute the amount of goodwill that Baine records at the purchase date.

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abiolataiwo2015

The amount of goodwill that Baine records at the purchase date is $80,000.

Using this formula

Goodwill=Purchased price-Fair value of assets

Where:

Purchased price=$500,000

Fair value of assets=$420,000

Let plug in the formula

Goodwill=$500,000-$420,000

Goodwill=$80,000

Inconclusion the amount of goodwill that Baine records at the purchase date is $80,000.

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