Question

Suppose DU Kuaidi pays $66 million to buy Lone Star Overnight. Lone Star’s assets are valued at $72 million, and its liabilities total $23 million. How much goodwill did George’s Delivery purchase in its acquisition of Lone Star Overnight? 72-23=

Answer 1

$17 million

Step-by-step explanation:

The goodwill acquired is given by the purchase price subtracted by the fair value of Lone Star Overnight. Assume that Lone Star's fair value is its assets value deducted by its liabilities. The goodwill purchased is:

`G = 66 - (72-23)\\G=\$17\ million`

George's delivery purchased $17 million in goodwill.