Firm a Acquires Firm B When Firm B Has a Book

Multiple Choice

Firm A acquires Firm B when Firm B has a book value of assets of $155 million and a book value of liabilities of $35 million.Firm A actually pays $175 million for Firm B. This purchase would result in goodwill for Firm A equal to

A) $175 million
B) $155 million
C) $120 million
D) $55 million Book Value of B = $155 - $35 = $120; Firm A pays $175, goodwill = $175 - $120 = $55