TOM Inc has decided to purchase $100\%$ the voting shares of JERRY by issuing common shares with a market value of $$400,000$ on July $1,2022.$ On the date, the balance sheets of each of these companies were as follows:

TOM Inc JERRY Inc

Cash and Short$-$Term Securities $$900,000$ $$200,000$

Inventory $ $50,000$ $$120,000$

Plant and Equipment $($net$)$ $$350,000$ $$150,000$

Goodwill $$-$ $ $80,000$

Total Assets $$1,300,000$ $$550,000$

Current Liabilities $ $180,000$ $$160,000$

Bonds Payable $ $400,000$ $$100,000$

Common Shares $ $500,000$ $$200,000$

Retained Earnings $ $220,000$ $ $90,000$

Total Liabilities and Equity $$1,300,000$ $$550,000$

On that date, the fair values of JERRY Assets and Liabilities were as follows:

Cash and Short$-$Term Securities $$200,000$

Inventory $ $90,000$

Plant and Equipment $($net$)$ $$250,000$

Current Liabilities $$160,000$

Bonds Payable $ $88,000$

In addition to the above, an independent appraiser deemed that JERRY Inc. had trademarks with a fair market value of $$100,000$ which had not been accounted for.

Required

Based on the information provided:

a$)$ Calculate the amount of Goodwill arising from this combination. $5$ Marks

Answer:

b$)$ Prepare the journal entry to record TOM's acquisition of JERRY's shares. $1$ Mark

Answer:

c$)$ Prepare TOM's Consolidated Balance Sheet immediately following its acquisition of JERRY's voting shares