The Ernie Company acquired the Bert Company in January of Year 1. Bert's balance sheet included $700,000 of assets, $250,000 of liabilities and equity of $450,000. Ernie agrees to assume the liabilities and pay $480,000 to acquire Bert. An independent appraiser assessed the fair value of Bert's assets to be $630,000. Indicate whether each of the following statements about this transaction is true or false.
_____ a) Ernie's entry to record the transaction includes a debit to the assets for $700,000.
_____ b) Ernie's entry to record the transaction includes a debit to liabilities for $250,000.
_____ c) Ernie will recognize $100,000 of goodwill in recording the acquisition of Bert.
_____ d) It is impossible for Ernie to estimate the length of life for goodwill.
_____ e) The goodwill will be amortized in the same manner as patents.

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The Answer of The Ernie Company acquired the Bert Company in January of Year 1. Bert's balance sheet included $700,000 of assets, $250,000 of liabilities and equity of $450,000. Ernie agrees to assume the liabilities and pay $480,000 to acquire Bert. An independent appraiser assessed the fair value of Bert's assets to be $630,000. Indicate whether each of the following statements about this transaction is true or false.
_____ a) Ernie's entry to record the transaction includes a debit to the assets for $700,000.
_____ b) Ernie's entry to record the transaction includes a debit to liabilities for $250,000.
_____ c) Ernie will recognize $100,000 of goodwill in recording the acquisition of Bert.
_____ d) It is impossible for Ernie to estimate the length of life for goodwill.
_____ e) The goodwill will be amortized in the same manner as patents.

The Ernie Company Acquired the Bert Company in January of Year