The Arcadia Company made an offer to purchase all of the outstanding shares of The Claremont Company at a price of \($10\) per share, or an aggregate of \($22\) million. Immediately prior to the purchase offer, the balance sheets of the two companies guia. as follows:

During its due diligence review, Arcadia determined that while the liabilities of The Claremont Company were fairly valued, the reported value of Claremont’s inventory was understated by \($1,000,000\) as a consequence of using the LIFO method, and the intangible assets of The Claremont Company were overstated by \($4,000,000\) because an impairment in the value of certain intangible assets had not yet been recorded in the company’s financial statements.
Required

a. Calculate the value of the goodwill implicit in the offer price of \($22\) million.

b. Prepare the unconsolidated balance sheet of The Arcadia Company immediately following a successful acquisition of 100 percent of the outstanding shares of The Claremont Company.

c. Prepare the consolidated balance sheet for The Arcadia-Claremont Company assuming a successful acquisition offer.

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The Arcadia Company The Claremont Company Assets Cash..... Inventory.. Fixed assets, net Intangible assets Total Assets Liabilities Accounts payable... Bonds payable.. Total Shareholders' Equity Capital stock $ 26,000,000 12,000,000 50,000,000 30,000,000 $118,000,000 $ 7,000,000 25,000,000 $ 2,000,000 7,000,000 15,000,000 18,000,000 $42,000,000 $ 4,000,000 19,000,000 32,000,000 23,000,000 56,000,000 14,000,000 30,000,000 5,000,000 Total 86,000,000 19,000,000 Total liabilities and shareholders' equity. $118,000,000 $42,000,000 Retained earnings