Sunland company’s 12/31/18 balance sheet reports assets of $694 and liabilities of $274. all of sunland’s assets’ book values approximate their fair value, except for land, which has a fair value that is $414000 greater than its book value. on 12/31/18, horace wimp corporation paid $7074000 to acquire sunland. what amount of goodwill should horace wimp record as a result of this purchase?

$2,460,000

Explanation:

For computing the cost of the goodwill, first we have to calculate the fair value of the net asset which is shown below:

The fair value of net asset = The fair market value of assets + excess value of land  - the fair market value of liabilities

= $6,940,000 + $414,000  - $2,740,000

= $4,614,000

And, the purchase value of Sun land is $7,074,000

So, the goodwill would be  

= $7,074,000 - $4,614,000

= $2,460,000

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