Question
Arizona Corp. acquired the business Data Systems for $320,000 cash and assumed all liabilities at the date of purchase. Data's books showed tangible assets of
Arizona Corp. acquired the business Data Systems for $320,000 cash and assumed all liabilities at the date of purchase. Data's books showed tangible assets of $260,000, liabilities if $40,000, and stockholders' equity of $220,000. An appraiser assessed the fair market value of the tangible assets at $250,000 at the date of acquisition. Arizona Corp.'s Financial condition just prior to the acquisition is shown in the following statements model:
Assets = Liabilites + Equity | Rev. - Exp. = Net Inc. | Cash Flow
Assets: Cash (=$450,000), Tang. Assets, & Goodwill
Equity = $450,000
a). Compute the amount of goodwill acquired
b). Record the acquisition in a financial statement model like the preceding one.
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