Question

Please help to show the workings:

Please note that this is the second time this question has been posted as the first answer was incorrect.

Maryhill Corp. purchased all of Hood River Company's common stock for $3,612,000 cash on January 1. When analyzing the purchase price, Maryhill Corp. determined that the other assets of Hood River were undervalued by $633,600 and that the company had an unrecorded liability of $240,000 related to ongoing litigation. Any excess purchase price was for goodwill.

Use the following table to consolidate the balance sheets of the two companies as of the acquisition date.

	Maryhill	Hood River	Consolidating Adjustments	Consolidated Balance Sheet
Investment in Hood River	$3,612,000
Other assets	6,156,000	$2,452,800
Goodwill
Total assets	$9,768,000	$2,452,800
Liabilities	$4,060,800	$1,166,400
Common stock	2,052,000	540,000
Retained earnings	3,655,200	746,400
Total Liabilities & Equity	$9,768,000	$2,452,800

Answer 1

The completed table is provided as follows:

	Maryhill	Hood River	Consolidating Adjustments	Consolidated Balance Sheet
Investment in Hood River	3,612,000		-3,612,000
Other assets	6,156,000	2,452,800	633,600	9,242,400
Goodwill			1,932,000	1,932,000
Total assets	$9,768,000	$2,452,800		$11,174,400
Liabilities	4,060,800	1,166,400	240,000	5,467,200
Common stock	2,052,000	540,000	-540,000	2,052,000
Retained earnings	3,655,200	746,400	-746,400	3,655,200
Total Liabilities & Equity	$9,768,000	$2,452,800		$11,174,400

_____

Notes:

The value of goodwill is determined as below:

Goodwill = Purchase Price - ](Total Assets Acquired) - (Total Liabilities Acquired)] = 3,612,000 - [(2,452,800 + 633,600) - (1,166,400 + 240,000)] = $1,932,000