Exercise 8-20A Computing and recording goodwill LO 8-10
Arizona Corp. acquired the business Data Systems for $365,000 cash and assumed all liabilities at the date of purchase. Datas books showed tangible assets of $430,000, liabilities of $28,000, and stockholders equity of $402,000. An appraiser assessed the fair market value of the tangible assets at $355,000 at the date of acquisition. Arizona Corp.s financial condition just prior to the acquisition is shown in the following statements model:
Exercise 8-20A Computing and recording goodwill LO 8-10 Arizona Corp. acquired the business Data Systems for $365,000 cash and assumed all liabilities at the date of purchase. Data's books showed tangible assets of $430,000, liabilities of $28,000, and stockholders' equity of $402,000. An appraiser assessed the fair market value of the tangible assets at $355,000 at the date of acquisition. Arizona Corp's financial condition just prior to the acquisition is shown in the following statements model: Liab. Equity Rev. Exp. Net Inc. Cash Flow Cash 630,000 Assets Tang. Assets + NA Goodwill NA NA 63 630,000 NA NA NA NA Required: a. Compute the amount of goodwill acquired. b. Record the acquisition in a financial statements model like the preceding one. d. Record the acquisition In general Journal format. Complete this question by entering your answers in the tabs below. Required A Required B Required D Compute the amount of goodwill acquired. Goodwill (Required A Required B > Required: a. Compute the amount of goodwill acquired. b. Record the acquisition in a financial statements model like the preceding one. d. Record the acquisition In general Journal format. Complete this question by entering your answers in the tabs below. Required Required B Required D Record the acquisition in a financial statements model like the preceding one. (In the Cash Flow column, use the initials OA to designate operating activity, IA for investing activity, FA for financing activity, NC for Net Change and NA to indicate the element is not affected by the event. Enter any decreases to account balances with a minus sign.) ARIZONA CORP Statements Model Assets = Liabilities + Equity Revenue Expenses = Net Income Cash Flow Cash + Tang + Goodwill = Assets 630,000 + 630.000 -1 = NA Acquisition Required A Required B Required D Record the acquisition in general journal format. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record cash paid for acquisition of assets and liabilities. Note: Enter debits before credits. Event General Journal Acquisition Debit Credit Record entry Clear entry View general journal
