On January 3, 2008, Austin Corp. purchased 25% of the voting common stock of Gai

Question

On January 3, 2008, Austin Corp. purchased 25% of the voting common stock of Gainesville Co., paying $2,500,000. Austin decided to use the equity method to account for this investment. At the time of the investment, Gainesville's total stockholders' equity was $8,000,000. Austin gathered the following information about Gainesville's assets and liabilities.
Book Value Fair Value
Buildings (10 year life) 400,000 500,000
Equipment ( 5 year life) 1,000,000 1,300,000
Franchises (8 year life) 0 400,000

Calculate the goodwill?

Explanation / Answer

300000

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