Assume Caltron paid $20 million to purchase HarborSide.com. Assume further that HarborSide had the following summarized data at the time of the Caltron acquisition (amounts in millions):

HarborSide€™s long-term assets had a current market value of only $21 million.

Requirements
1. Compute the cost of goodwill purchased by Caltron.
2. Journalize Caltron€™s purchase of HarborSide.
3. Explain how Caltron will account forgoodwill.

Transcribed Image Text:

HarborSide.com Assets Liabilities and Equity $28 13 $15 Total liabilities 26 Stockholders' equity S41 Long-term assets 541