Vasquez Manufacturing Company decided to expand further by purchasing Wasserman Company. The balance sheet of Wasserman Company as of December 31, 2015 was as follows:

Wasserman Company

Balance Sheet

December 31, 2015

Assets Liabilities and Equities

Cash $210,000 Accounts payable $375,000

Receivables 550,000 Common stock 800,000

Inventory 275,000 Retained earnings 885,000

Plant assets (net) 1,025,000

Total assets $2,060,000 Total liabilities and equities $2,060,000

An appraisal, agreed to by the parties, indicated that the fair value of the inventory was $370,000 and that the fair value of the plant assets was $1,325,000. The fair value of the receivables is equal to the amount reported on the balance sheet. The agreed purchase price was $2,275,000, and this amount was paid in cash to the previous owners of Wasserman Company.

Required:

Determine the amount of goodwill (if any) implied in the purchase price of $2,275,000.

Answer rating: 100% (QA)

Net worth Total asset current liabilities cash receiv... View the full answer