Calculation Of Goodwill During Company Takeover


Hardware, Inc. purchased 100% of the common shares of Software, Inc. for $470,000 on 1/1/07.  Software, Inc.'s balance sheet just before the purchase appears below:
Cash                                                           $90
Net fixed assets                                           220
Total assets                                                 310
Liabilities                                                     240
Stockholders' equity                                      70
Total liabilities and stockholders' equity         310

The fair market value of Software's assets and liabilities were equal to their book values. 

1) Compute the goodwill recognized by Hardware for the purchase.
2) How would goodwill appear on Hardware's financial statements?
3) Hardware has net income, excluding Software for 2007 of $150,000.  Software has a net loss for 2007 of $10,000.  Compute consolidated net income for 2007. 


The question belongs to Accounting and it discuses about a scenario where one company has purchased another company and its goodwill is being valued during the purchase. This assessment has been given in the solution.

Total Word Count 98

Download Full Solution


  • HWA

    this is a very good website

  • HWA

    I have 50 questions for the same test your page is showing only 28

  • HWA

    hi can you please help or guide me to answer my assignments. thanks

  • HWA

    hi can anyone help or guide me to my assignments. thanks

  • HWA

  • HWA

    This solution is perfect ...thanks

  • HWA

    Hello Allison,I love the 2nd image that you did! I also, had never heard of SumoPaint, is something that I will have to exolpre a bit! I understand completely the 52 (or so) youtube videos that you probably watched. Sometimes they have what you want, sometimes they don't! However, it is always satisfying when you are able to produce something that you have taught yourself. Great job!Debra 0 likes

  • HWA

    Perfect bank of solution. 

  • HWA

    great !

  • HWA
    Paul Brandon-Fritzius

    thanks for the quick response. the solution looks good. :)

  • HWA
    tina Johnson

    thnx for the answer. it was perfect. just the way i wanted it. 

  • HWA

    works fine.