kosher pickle company acquires all the outstanding stock of midwest produce for $10.0 million. the fair value of midwest's assets is $7.0 million. the fair value of midwest's liabilities is $.8 million. calculate the amount paid for goodwill.

Fair value is a rational and unbiased estimate of the potential market price of a good, service, or asset in accounting and in most schools of economic thought.

When both the buyer and seller freely agree on a price, fair value is the estimated price at which an asset is bought or sold.

Individuals and businesses can determine the fair value of an asset by comparing its current market value, growth potential, and replacement cost.

The owner of Company B believes he can sell the stock at $50 per share once he acquires it, so he purchases a million shares at the original price.

Therefore,

The term for computing charity is given by;

Goodwill = Consideration paid– Fair value of net identifiable assets

where;

Consideration paid = $10.0 million

Fair value of net identifiable assets = Midwest's assets - Midwest's liabilities

Midwest's assets = $7.0 million

Midwest's liabilities = $.8 million

Fair value of net identifiable assets = (7.0 M- 0.8 M)

= 6.2 million

Replace in the expression below;

Goodwill = Consideration paid – Fair value of net identifiable assets

Goodwill = 10.0 M- 6.2 M

Goodwill = 3.8 million

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