Sea Corp purchased the business Beta Resources for \(\$ 200,000\) cash and assumed all liabilities at the date of purchase. Beta's books showed tangible assets of \(\$ 150,000\), liabilities of \(\$ 40,000\), and stockholders' equity of \(\$ 110,000\). An appraiser assessed the fair market value of the tangible assets at \(\$ 185,000\) at the date of purchase. Sea Corp's financial condition just prior to the purchase is shown in the following statements model:

Required

a. Compute the amount of goodwill purchased.

b. Record the purchase in a financial statements model like the preceding one.

c. When will the goodwill be written off under the impairment rules?

d. Record the purchase in general journal format.

Transcribed Image Text:

Assets = Liab. + Equity Rev. - Exp. = Net Inc. Cash Flow Cash + Tang. Assets + Goodwill 300,000 + NA + NA = NA + 300,000 NA NA = NA NA