Arizona Corp. had the following account balances at 12/1/19:

• Receivables: $96,000; Inventory: $240,000; Land: $720,000; Building: $600,000; Liabilities: $480,000; Common stock: $120,000; Additional paid-in capital: $120,000; Retained earnings, 12/1/19: $840,000; Revenues: $360,000; and Expenses: $264,000.

Several of Arizona's accounts have fair values that differ from book value. The fair values are:

• Land $480,000; Building $720,000; Inventory $336,000; and Liabilities $396,000.

Inglewood Inc. acquired all of the outstanding common shares of Arizona by issuing 20,000 shares of common stock having a $6 par value, but a $66 fair value. Stock issuance costs amounted to $12,000.

Imagine you are the decision maker at Inglewood Inc.

Prepare a fair value allocation and goodwill schedule at the date of the acquisition.

Determine in 525- words whether you would encourage acquiring Arizona Corp? Be sure to include your rationale.

Arizona Corp.

Inglewood Fair Value Allocation Schedule December 1, 2019

Payment by Inglewood ($66 fair value x 20,000 sh) = 1320000 Inventory (undervalued) Land (overvalued) Building (undervalued) Liabilities Book value of Arizona Corp. (assets - liabilities) Excess of fair value over book value Allocation to specific accounts between fair value and book value: Goodwill