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:

Developmental Quotient (DQ)

A measure used to assess a child's developmental progress in several domains compared to typical developmental milestones.

Overall Developmental Score

This is a composite measurement assessing the comprehensive developmental progress or status of an individual, often used in psychological and educational evaluations.

Motor Skills

Abilities that require the use of muscles to perform movements, often categorized into fine (small) and gross (large) motor skills.

Adaptive Behavior

A set of practical, social, and conceptual skills that people learn and perform to function in their everyday lives.