Compute the goodwill associated with the purchase of Pleasantville. 2. Prepare the journal entry necessary at January 2, to record the acquisition of Pleasantville.
Pleasantville Company had the following balance sheet on January 1.
Pleasantville Company
Balance Sheet
January 1
1
Cash
$175,000.00
Accounts Payable
$57,000.00
2
Inventory
157,000.00
Notes Payable
250,000.00
3
Property, Plant, and Equipment
200,000.00
Mortgage Payable
150,000.00
4
Patent
25,000.00
Retained Earnings
100,000.00
5
$557,000.00
$557,000.00
On January 2, Carrs Company came to an agreement to purchase Pleasantville by acquiring all of its outstanding shares for $575,000 in cash. On that date in time, the fair value of their inventory was $150,000, and the fair value of the equipment was $225,000. The book value equals the fair value for all other accounts listed.
Required:
1.
Compute the
2.
Prepare the
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