HBABB Corp has purchased all of the 10 million shares of BOBCO stock for $43 75 a share BOBCOs net asset value is $350 million How much goodwill does HBABB need to consider on its balance sheet Suppose part of the deal requires HBABB to pay $30 million of BOBCOs debt Refigure the net asset value (i...

Goodwill 437510 million 350 million 875 million Goodwill with debt repayment 437510 mill ...

HBABB Corp. has purchased all of the 10 million shares of BOBCO stock for $43.75 a share.

Question:

HBABB Corp. has purchased all of the 10 million shares of BOBCO stock for $43.75 a share. BOBCO’s net asset value is $350 million. How much does HBABB need to consider on its balance sheet? Suppose part of the deal requires HBABB to pay $30 million of BOBCO’s debt. Refigure the net asset value (i.e., reduce the debt by $30 million) and then recalculate the . One of your accountants tells you that the net asset value should not be changed and that the $30 million used for BOBCO’s debt should be added to the purchase price. Refigure the calculation and determine if there really is a difference. If there is a difference, which calculation is correct?
Goodwill
Goodwill is an important concept and terminology in accounting which means good reputation. The word goodwill is used at various places in accounting but it is recognized only at the time of a business combination. There are generally two types of...