#1.) In January, Planet Manufacturing (the Company) purchased new fabricating machinery and installed it in its main processing building. The machinery had a list price of $80,000. The seller agreed to allow a 10% discount because the Company paid cash. Taxes were 6.5% of the net purchase price. The Company hired an engineer to provide plans for modifications of the building to allow for installation of the machinery. The engineer charged $750. Two employees were reassigned to work exclusively on the installation. The employees spent one and a half months installing the machinery. The employees annual salaries are $32,000 per year (each). Modifications to the building to allow for installation of the new machinery cost $2,600. The cost of the companys annual liability insurance policy increased by $540 per year as a result of the acquisition of the machinery. Delivery terms were FOB shipping point. Freight cost was $1,500. Company utilities during installation were $3,400. Costs incurred during installation and set-up (calibration, scrap, etc.) totaled $1,100. The machinery has a 12 year useful life and an expected salvage value of $12,000.

Required: What is the acquisition cost of the machine? Determine the amount to be capitalized on the balance sheet for the asset purchase. You must show your work for complete credit. #2.) What is Goodwill in financial accounting? When can a company recognize Goodwill? How is it calculated? How is Goodwill classified in the financial statements?