(Goodwill combination- partial method)

Red Corp. acquired 80% shareholding in Blue Corp. for $40 million. Book value of net identifiable assets of Blue Corp. is $25 million.

The fair value of Blues asset is the same as their book value except accounts receivables which are impaired by $5 million.

Book value of assets is $ 75 million while book value of liabilities is $55 million.

The purchase consideration is the cash paid to acquire 80% ownership and it equals $40 million.

Task: Compute the goodwill