(Solution) - Assume Doltron Co paid 18 million to purchase Bailey Industries -(2025 Original AI-Free Solution)

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Academic Level: Undergrad. (yrs 3-4)

Paper Format: APA

Pages: 5 Words: 1375

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Assume Doltron Co. paid $18 million to purchase Bailey Industries. Assume further that Bailey Industries had the following summarized data at the time of the Doltron Co. acquisition (amounts in millions):

Bailey Industries' current assets had a current market value of $17 million, long-term assets had a current market value of only $21 million, and liabilities had a market value of $24 million?
Requirements
1. Compute the cost of goodwill purchased by Doltron Co?
2. Journalize Doltron Co.'s purchase of Bailey Industries?
3. Explain how Doltron Co. will account for goodwill?