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 liab...

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?

Answer Details

To determine the amount paid for goodwill, we need to calculate the net assets acquired by Mr. White. Net assets = Total assets - Total liabilities Net assets = GH¢ 670,000 - GH¢ 320,000 Net assets = GH¢ 350,000 The purchase price of GH¢ 410,000 minus the net assets of GH¢ 350,000 gives the goodwill purchased: Goodwill = Purchase price - Net assets Goodwill = GH¢ 410,000 - GH¢ 350,000 Goodwill = GH¢ 60,000 Therefore, the amount paid for goodwill is GH¢ 60,000.