Question: Hunt Company is considering purchasing a competing company in order
Hunt Company is considering purchasing a competing company in order to expand its market share. Estimates of the excess of the value of the individual assets, less liabilities to be assumed, range from $50,000 to $60,000, depending on the manner in which that excess is calculated. Hunt believes it can purchase the competitor for a direct cash outlay of $700,000, which is only $25,000 more than the value of the individual assets less the liabilities that Hunt will assume. Assuming Hunt makes the purchase for $700,000; at what amount should goodwill be recorded? Briefly explain your answer.
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