HBABB Corp. has purchased all of the 12 million shares of BOBCO stock for $42.5 a share. BOBCO's net asset value is $350 million.
1. How much goodwill does HBABB need to consider on its balance sheet? Round your answer to one decimal place. $ million
2. Suppose part of the deal requires HBABB to pay $33 million of BOBCO's debt. Refigure the net asset value (i.e., reduce the debt by $33 million) and then recalculate the goodwill. Round your answer to one decimal place. $ million
3. One of your accountants tells you that the net asset value should not be changed and that the $33 million used for BOBCO's debt should be added to the purchase price. Refigure the goodwill calculation and determine if there really is a difference. Round your answer to one decimal place. $ million
4. If there is a difference, which calculation is correct? The first or second?