Assume Hurd Co. paid $28 million to purchase Southwest.com. Assume further that southwest had the following summarized data at the time of the Hurd Co. acquisition (amounts in millions):

Southwest€™s long-term assets had a current market value of only $32 million, and liabilities have a market value of $29 million.

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

Transcribed Image Text:

Southwest.com Asscts Liabilities and Equity 14 oal liabilitics Current assets Long-term assets ..$29 37 Stockholders' equity S51 $51