Pleasantville Company had the following balance sheet on January 1.
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 is accurate as of January1, and was equal to fair value. Required:
1.) Compute the goodwill associated with the purchase of Pleasantville.
2.) Prepare the journal entry necessary at January 1, to record the acquisition of Pleasantville.

Question

Pleasantville Company had the following balance sheet on January 1.
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 is accurate as of January1, and was equal to fair value.  Required:
1.) Compute the goodwill associated with the purchase of Pleasantville.
2.) Prepare the journal entry necessary at January 1, to record the acquisition of Pleasantville.

Quizplus · Accepted Answer

The Answer of Pleasantville Company had the following balance sheet on January 1.
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 is accurate as of January1, and was equal to fair value.  Required:
1.) Compute the goodwill associated with the purchase of Pleasantville.
2.) Prepare the journal entry necessary at January 1, to record the acquisition of Pleasantville.

Pleasantville Company Had the Following Balance Sheet on January 1