Pier 5 has been in business 8 years with 4 stores in the San Francisco bay area. Their local reputation for making savory pies such as curried potatoes is well recognized. A national food distributor has offered to purchase the company. Pier 5 has $1.2 million of assets on their books but those assets have a fair market value of $1.5 million and $.3 million of liabilities. If the distributor offers to buy Pier 5 for $3.5 million and assume the liabilities of Pier 5, how much will be recorded as goodwill based on the offered purchase price?
Dear Student, Purchased Goodwill will be recognized in this case as follows: Goodwill = Purchase Price Paid – Fair... View the full answer