assume tom benyon enterprises purchases the business for 240 000 cash explain how to 610326

This exercise illustrates the steps in estimating the value of goodwill. Mr. Judski is contemplating the sale of his business, Classic Vettes. The following data are available.

Book value of tangible & identifiable intangible assets less liabilities

$135,000

Fair market value of tangible & identifiable intangible assets less liabilities

200,000

Estimated fair market value of the business as a whole

240,000

Instructions

  1. Compute the estimated value of goodwill.
  2. Assume Tom Benyon Enterprises purchases the business for $240,000 cash. Explain how Tom Benyon Enterprises should account for the goodwill at the purchase date and in the future as well as the reasons why.