Use the following information to answer the question below
Mr White acquired Mr Black’s business for GH¢ 410,000. The total assets were GH¢ 670,000 and liabilities amounted to GH¢ 320,000.
How much was paid for goodwill?
- GH¢ 350,000
- GH¢ 260,000
- GH¢ 90,000
-
GH¢ 60,000
The correct answer is: D
Explanation
Assets 670,000 - liabilities 320,000 = 350,000 (business value after liabilities claims)
Purchase price 410,000 - 350,000 business value = 60,000 goodwill