Arizona Corp. acquired the business Data Systems for $320,000
cash and assumed all liabilities at the date of purchase. Data’s
books showed tangible assets of $340,000, liabilities of $19,000,
and stockholders’ equity of $321,000. An appraiser assessed the
fair market value of the tangible assets at $310,000 at the date of
acquisition. Arizona Corp.’s financial condition just prior to the
acquisition is shown in the following statements model:
| Assets | = | Liab. | + | Equity | Rev. | – | Exp. | = | Net Inc. | Cash Flow | |||||
| Cash | + | Tang. Assets | + | Goodwill | |||||||||||
| 540,000 | + | NA | + | NA | = | NA | + | 540,000 | NA | – | NA | = | NA | NA | |
Required:
a. Compute the amount of goodwill acquired.
b. Record the acquisition in a financial
statements model like the preceding one.
d. Record the acquisition in general journal
format.-Record cash paid for acquisition of assets and
liabilities.
Homework Answers
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Arizona Corp. acquired the business Data Systems for $320,000
cash and assumed all liabilities at the...
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