Problem 7-3B Calculate and record goodwill (LO7-2)
Northern Equipment Corporation purchased all the outstanding common stock of Pioneer Equipment Rental for $5,430,000 in cash. The book values and fair values of Pioneer’s assets and liabilities were:
Homework Answers
Answer:
Requirements-1
| Purchase price | 5430000 | |
| Less fair value of assets acquired (480000+4630000+210000) | 5320000 | |
| Less Fair value of liabilities assumed | (920000) | |
| Fair value of identifiable net assets | 4400000 | |
| Goodwill | 1030000 |
Requirements-2
journal entry
| Transaction | Account title | Debit | Credit |
| 1. | Account receivable | 480000 | |
| Building | 4630000 | ||
| Equipment | 210000 | ||
| Goodwill | 1030000 | ||
| Account payable | 920000 | ||
| Cash | 5430000 |
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Problem 7-3B Calculate and record goodwill (LO7-2)
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