Betta Group purchased Danio, Inc. for $960,000. The market value of Danio's assets and liabilities at the time of purchase were $1,300,000 and $360,000 respectively. The journal entry to record this will include:

Question

Quizplus · Accepted Answer

The correct journal entry includes debiting the asset accounts for their market value ($1,300,000), recognizing Goodwill for the excess purchase price over the net assets acquired ($20,000), crediting the liabilities to recognize the obligations assumed ($360,000), and crediting cash for the purchase price ($960,000). The calculation for Goodwill is the purchase price ($960,000) minus the net assets acquired ($1,300,000 - $360,000 = $940,000), which equals $20,000.

Betta Group Purchased Danio, Inc