Firm a acquires firm b when firm b has a book value of assets of $175 million and a book value of liabilities of $45 million. firm a actually pays $195 million for firm b. this purchase would result in goodwill for firm a equal to

 goodwill = $65

Explanation:

given data

book value of assets = $175 million

book value of liabilities = $45 million

actually pays  = $195 million

to find out

purchase would result in goodwill

solution

we get here first Value of firm B that is

Value of firm B = Value of Assets - Value of Liabilities    1

Value of firm B = $175 - $45

Value of firm B = $130

and  

goodwill = purchase cost - value of firm's assets      2

goodwill = $195  - $130

 goodwill = $65

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