On May 1, 2013, Homer acquired the assets and agreed to take on and pay off the liabilities of Tonga in exchange for 10,000 of Homer€™s common shares. Homer accounted for the acquisition of the net assets of Tonga using the purchase method. On the date of acquisition, Tonga€™s carrying value of depreciable assets exceeded Homer€™s estimate of their fair value, but Homer judged all other items on Tonga€™s books to reflect fair value on that date so that the purchase price exceeded the fair value of the identifiable assets, generating goodwill.
On the date of the acquisition, Tonga€™s shareholders€™ equity was $980,000, and its liabilities totaled $80,000. Tonga reported no goodwill on its balance sheet.
Homer made the following journal entry to record the acquisition:

a. What was the carrying value on Tonga€™s books of its total assets just before the acquisition?
b. What was the carrying value of depreciable assets of Tonga just before theacquisition?

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