Nadine's Home Fashions Has $2

Multiple Choice

Nadine's Home Fashions has $2.12 million in net working capital. The firm has fixed assets with a book value of $31.64 million and a market value of $33.9 million. The firm has no long-term debt. The Home Centre is buying Nadine's for $37.5 million in cash. The acquisition will be recorded using the purchase accounting method. What is the amount of goodwill that The Home Centre will record on its balance sheet as a result of this acquisition?

A) $1.48 million
B) $3.34 million
C) $3.74 million
D) $4.14 million
E) $5.86 million