Homework Answers
a)
| Amount paid for acquisition | 450000 | |
| less:Book value of equity acquired | ||
| common stock | 300000 | |
| Retained earning | 20000 | |
| Undervaluation of lalnd | 30000 | |
| undervaluation of equipment | 5000 | |
| Book value of equity | (355000) | |
| Goodwill at time of acquisition | 95000 |
b)
| Goodwill at time of acquisition | 95000 |
|
less:Amortization of goodwill [95000/10] |
-9500 |
| Balance in goodwill after one year | 85500 |
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