Assume that an investor purchases 100% of an investee company for $32 million in a transaction that qualifies as a business combination. The fair values of the identifiable net assets are as follows: Tangible net assets: Receivables, inventories, PPE, payables, and accruals $10 million
Intangible assets: Patents, customer lists, trade name, software, etc. 7 million
Research and development assets: Research projects in process at the investee company 8 million
In addition to the purchase price, the investor also incurs acquisition-related costs amounting to $1.8 million for professional fees and the internal allocation of overhead relating to the purchase.
a. How much of the purchase price is assigned to Goodwill?
b. How do we account for Goodwill subsequent to the acquisition?
c. Given the accounting treatment for Goodwill subsequent to the acquisition, why might companies be motivated to increase the amount assigned to goodwill?

The new york times (nov. 30, 1993) reported that “the inability of opec to agree last week to cut production has sent the oil market into turmoil . . [leading to] the lowest price for domestic crude oil since june 1990.” why were the members of opec trying to agree to cut production? so they could save more oil for future consumption so they could lower the price so they could raise the price why do you suppose opec was unable to agree on cutting production? because each country has a different production capacity because each country experiences different production costs because each country has an incentive to cheat on any agreement the newspaper also noted opec’s view “that producing nations outside the organization, like norway and britain, should do their share and cut production.” what does the phrase “do their share” suggest about opec’s desired relationship with norway and britain? opec would like norway and britain to keep their production levels high. opec would like norway and britain to act competitively. opec would like norway and britain to join the cartel.