Computing and recording goodwillSea Corp purchased the business Beta Resources for $200,00...

Computing and recording goodwill

Sea Corp purchased the business Beta Resources for $200,000 cash and assumed all liabilities at the date of purchase. Beta’s books showed tangible assets of $150,000, liabilities of $40,000, and stockholders’ equity of $110,000. An appraiser assessed the fair market value of the tangible assets at $185,000 at the date of purchase. Sea Corp’s financial condition just prior to the purchase is shown in the following statements model:

Required

a. Compute the amount of goodwill purchased.

b. Record the purchase in a financial statements model like the preceding one.

c. When will the goodwill be written off under the impairment rules?

d. Record the purchase in general journal format.