Sage Ltd is considering the purchase of Rosemary Ltd, which produces a product that Sage Ltd uses in its manufacturing process. Relevant data for Rosemary Ltd are as follows.

Required

(a) Determine the price Sage Ltd would pay for goodwill in acquiring Rosemary Ltd if the total consideration transferred in the business combination was $3 000 000, in cash.

(b) Prepare entries for Sage Ltd in general journal form to record the acquisition of Rosemary Ltd for $2 000 000 cash.

Transcribed Image Text:

Fair value of identifiable assets Fair value of identifiable liabilities $ 3 600 000 1 440 000