On June 1, 2014, Kappa Company acquired all of the net assets of Delta Company for $ 120,000 cash. The statements of financial position for both companies prior to the acquisition follow:

Required:
1. How much goodwill was involved in this merger? Show computations.
2. Record the merger by Kappa Company on June 1, 2014.
3. Prepare a consolidated statement of financial position immediately after the acquisition.

Transcribed Image Text:

Delta Kappa Compan Company Statement of Financial Position at June 1, 2014 Assets Cash Property, plant, and equipment (net) $176,000 13,000 165,000 $528,000 $178,000 $93,000 82,000 352,000 Total assets Liabilities Shareholders' equity Common shares Retained earnings 250,000 185.000 $528,000 65.000 31.000 $178,000 Total liabilities and shareholders' equity