Acquisition of Tangible and Intangible Assets

question 62

Essay

Acquisition of tangible and intangible assets
Abe Manufacturing Corp. decided to expand further by purchasing the net assets of ERB Manufacturing Corp. ERB's statement of financial position at December 31, 2020 follows.
An appraisal, agreed to by both parties, indicated that the fair value of the inventory was $ 320,000 and the fair value of the plant assets was $ 1,225,000. The fair value of the receivables and payables is equal to the amount reported on the balance sheet. The agreed purchase price was $ 3 million, and this amount was paid in cash to the owners of ERB
Instructions
Calculate the amount of goodwill (if any) implied in the purchase price of $ 3 million. Show calculations.

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Definitions:

Causal Attribution

The process of inferring causes for observed behavior, often relating to how individuals explain their own or others' behaviors.

Seligman

Refers to Martin E. P. Seligman, a psychologist known for his work on learned helplessness, positive psychology, and wellbeing.

Personal-Universal

Refers to a concept or phenomenon that is deeply individual yet simultaneously relevant across a wide range of people, transcending personal experiences to touch upon universal themes.

Depressed Individuals

People experiencing a persistent feeling of sadness and loss of interest, which differs from normal sadness or grief.