Raider Co. recently acquired all of Lost Arc. Inc.\'s net assets in a business a

Question

Raider Co. recently acquired all of Lost Arc. Inc.'s net assets in a business acquisition. The cash purchase price was $6.3 million. Lost Arc. Inc.'s assets and liabilities had the following appraised values immediately prior to the acquisition: land. $1.2 million: buildings. $2.9 million; inventory. $1.7 million; long-term notes payable, for which Raider Co. assumes payment responsibilities, $1.0 million. Required: How much goodwill will result from this transaction? (Enter your answers in whole dollars.)

Explanation / Answer

Lost Arc Inc Details Amt $ Assets (apprised values) Land               1,200,000 Building                 2,900,000 Inventory               1,700,000 Total Assets               5,800,000 Less : Liability : LT Note payable payment responsibility            (1,000,000) Net Asset value               4,800,000 Cash Purchase Price               6,300,000 Godwill (difference) $          1,500,000

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