GOODWILL. Pindar Corporation acquired all the outstanding stock of Strauss Company for $23,000 cash. The book value of Strauss’ equity (assets minus liabilities) at the date of the acquisition of its stock was $17,800. All Strauss’ assets and liabilities have book values equal to their fair values except for equipment, which has a book value of $6,300 and fair value of $10,700.

REQUIRED:

1. Calculate the amount of the goodwill.

2. Prepare the entry by Pindar to record the acquisition assuming that Strauss Company goes out of existence as a legal entity.

3. Prepare the entry by Pindar to record the acquisition assuming that Strauss Company continues as a legal entity.