Detailed Answer
(c) In an acquisition, the net assets of the acquired firm
are recorded at their FV. The excess of the cost of the investment
over the FV of the net assets acquired is allocated to goodwill.
The cost of this investment is $3,750,000 (250,000 shares ×
$15), and the FV of the net assets acquired, excluding goodwill
is $3,400,000 ($3,000,000 + $400,000). Therefore, the amount
allocated to goodwill is $350,000 ($3,750,000 – $3,400,000).