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Calculate the goodwill purchased

Question:

Sunreel Co purchased 80% stake in Codfish Inc on 1st January, 20x0. The purchase amount involved cash of $500,000 with an additional amount, of $40,000 to be paid a year later. As at that date CodFish's share capital is $400,000 with retained earnings of $10,000.

Excess cash can be invested at 8% as at 1st January 20x0.

Calculate the goodwill purchased by Sunreel Co

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Finance Basics: Calculate the goodwill purchased

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