Question

ALT-RECORDING GOODWILL There are 5 problems in this set. Choose a number between I and 5 GENERAL JOURNAL TOTAL SCORE: LINE DATE DERIT CREDIT GRADE Date Transaction 1/1/17 Whale Company issued 1,000,000 shares of $1.00 par common stock ar par 331/17 Whale Company paid 5600,000 to aequire Minnow Company At the time of the purchase, Minnow's assets and liabilities were as follkows CASH ACCOUNTS RECEIVABLE NVENTORY LAND BUILDINGS NOTES PAYABLE Whale determined that the Land had a fair market value of $100,000 and that the Building had a fair market value of S200,000 The other assets required no adjustmen 100,000 40,000 60,000 80,000 140,000 0,000 DEBIT TRIAL BALANCE CASH ACCOUNTS RECEIVABLE INVENTORY LAND BUILDINGS GOODWIL NOTES PAYABLE COMMON STOCK TOTALS CREDIT Record all assets and liabilities at oniginal cost or fair market value, whichever is greater Record the eash payment by Whale Any difference is to be dchited to Goodwill on the books of Whale Whale assumes the liability for the Note Payable Remarks: In the old days, the Goodwill was typically amortized straight-line over a perio of 40 years. Today,Goodwill is not amortized unless in is "npaired",in which case, an entry is made to record a Loss from Impairment of loodwill witha credit to Goodwill A good question to ask is this if a company pays more for a company than it actually is worth (in tems of futare prolits), is the estra amound paid really an asst Or, was the acquiring company unwise in paying so much for the acquiree

Answer 1

Date	General Journal	Debit	Credit
01/01/2017	Cash	$ 10,00,000.00
	Common stock		$10,00,000.00
	(To record issue of common stock)
03/31/2017	Cash	$   1,00,000.00
	Accounts receivables	$       40,000.00
	Inventory	$       60,000.00
	Land	$   1,00,000.00
	Buildings	$   2,00,000.00
	Goodwill	$   1,70,000.00
	Notes payable		$      70,000.00
	Cash		$   6,00,000.00
	(To record purchase of other company)

Trial balance	Debit	Credit
Cash	$   5,00,000.00*
Accounts receivables	$       40,000.00
Inventory	$       60,000.00
Land	$   1,00,000.00
Buildings	$   2,00,000.00
Goodwill	$   1,70,000.00
Notes payable		$       70,000.00
Common stock		$ 10,00,000.00
Totals	$ 10,70,000.00	$ 10,70,000.00

Cash balance = $1000000+100000-600000.