medium · Financial Accounting accounting-cycle-financial-statements
In an acquisition, Acquirer Co. pays 500 million cash for Target Co. Target's identifiable assets have a fair value of430 million and it has $130 million in liabilities.
What is the amount of Goodwill recorded, and how is it subsequently treated?
- $370 million; it represents the excess over Target's book value
- $200 million; it is not amortized but tested annually for impairment
- $70 million; it is amortized over a period not exceeding 40 years
- $200 million; it is amortized over 15 years for financial reporting
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