Maggie Ltd acquired the net assets and contingent liabilities of Transfig Ltd for a purchase consideration of $240,000. Transfig Ltd had total assets of $336,000 and total liabilities of $120,000, it also faced a lawsuit in which the plaintiffs demanded compensation of $160,000. It was estimated that Transfer Ltd had a 70% chance of winning the lawsuit (in which case it would not have to pay the compensation). Calculate the amount of goodwill to be recognized by Maggie Ltd.

Answer rating: 100% (QA)

Fair Value of Net Assets can be computed as Total Assets Total Liabilities Probability of ... View the full answer