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Sagot :
Solution :
Goodwill amount arises when an organization is purchased by another organization.
Goodwill can be calculated by :
Goodwill amount = consideration paid - the fair value of the total identifiable assets.
Here the paid consideration is = $ 19 million
The fair value of the total identifiable assets = assets of Midwest - liabilities of Midwest.
The fair value of the assets of Midwest is given as = $ 14.3 million
The fair value of the liabilities of Midwest is given as = $ 2.5 million
∴ The fair value of the total identifiable assets = Midwest's assets - Midwest's liabilities
= 14.3 - 2.5
= $ 11.8 million
Therefore the goodwill amount = 19 - 11. 8
= $ 7.2 million
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