Question

On January 4, 2014, David Company acquired all of the net assets (assets and liabilities) of William Company for $145,000 cash. The two companies merged, with David Company surviving. On the date of acquisition, William’s balance sheet included the following.


The property and equipment had a fair value of $85,000. William also owned an internally developed patent with a fair value of $3,000. The book values of the cash and liabilities were equal to their fair values.

Required:
1. How much goodwill was involved in this merger? Show computations.
2. Give the journal entry that David would make to record the merger on January 4,2014.


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  • CreatedJuly 01, 2014
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