thank you Potters has acquired several other companies. Assume that Potters purchased Kelleher for $12,000,000 cash....

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Potters has acquired several other companies. Assume that Potters purchased Kelleher for $12,000,000 cash. The book value of

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Answer 1

Answer #1

1) Compute Goodwill

Purchase price to acquire Kelleher		1200000
Market value of Kelleher's assets	1800000
Less: Market value of Kelleher's liabilities	-1100000
Less: Market value of Kelleher's net assets		-700000
Goodwill		500000

Journal entry

Date	Accounts and explanation	Debit	Credit
	Assets	1800000
	Goodwill	500000
	Liabilities		1100000
	Cash		1200000
	(To record purchase)

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