On January 2, Carrs Company came to an agreement to purchase Pleasantville by acquiring all of...
On January 2, Carrs Company came to an agreement to purchase Pleasantville by acquiring all of its outstanding shares for $575,000 in cash. On that date in time, the fair value of their inventory was $150,000, and the fair value of the equipment was $225,000. The book value is accurate as of January 1, and was equal to fair value.
Required:
1.) Compute the goodwill associated with the purchase of
Pleasantville.
2.) Prepare the journal entry necessary at January 1, to record the
acquisition of Pleasantville.
Homework Answers
Consideration paid for acquisition = $ 575,000
Fair value of assets = $150000+$225000 = $ 375,000
Goodwill = Consideration paid minus fair value of assets = $ 575,000 - $ 375,000 = $ 200,000
Journal entry as below:
Dr. Assets $ 375,000
Dr. Goodwill $ 200,000
Cr. Cash $ 575,000
(To record acquisition of Pleasantville)
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On January 2, Carrs Company came to an agreement to purchase
Pleasantville by acquiring all of...
On January 2, Carrs Company came to an agreement to purchase Pleasantville by acquiring all of...
On January 2, Carrs Company came to an agreement to purchase Pleasantville by acquiring all of its outstanding shares for $575,000 in cash. On that date in time, the fair value of their inventory was $150,000, and the fair value of the equipment was $225,000. The book value is accurate as of January 1, and was equal to fair value. Cash Inventory Property, plant, and equipment Patent $ 175,000 Accounts Payable 157,000 Notes Payable 200,000 Mortgage Payable 25.000 Retained Earnings...
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