Answer: $40,000
Explanation:
Goodwill to be reported = Purchased price - Fair value of net assets
Fair Value of Net Assets = Current Assets + Property and Equipment, net - Liabilities
Property and equipment are $110,000 more than carrying amount so;
Fair Value of Net Assets = 75,000 + (700,000 + 110,000) - 375,000
Fair Value of Net Assets = $510,000
Goodwill is therefore;
= 550,000 - 510,000
= $40,000
