Caldwell Inc. acquired 65% of Club Corp. for $2,600,000. There was no active market for the shares of Club Corp. Club owned a building and equipment with ten-year useful lives. The combined book value of these assets was $830,000, and the fair value was $950,000. For Club's other assets and liabilities, book value was equal to fair value. The total acquisition-date fair value of Club's net assets was $3,500,000.Using the acquisition method, determine the amount of goodwill associated with Caldwell's purchase of Club.
What will be an ideal response?
| Implied fair value of Club Corp. ($2,600,000 ÷ 65%) | $ | 4,000,000 | |
| Fair value of Club Corp.'s net assets | (3,500,000 | ) | |
| Goodwill | $ | 500,000 | |
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