The statement of financial position of Delacosta Corporation as at December 31, 2020, is as follows:

Delacosta Corporation
Statement of Financial Position
December 31, 2020
Assets
Goodwill (Note 1) .................................................... .................. $ 70,000
Buildings (Note 2) ................................................... ................ 1,640,000
Inventory ................................................................. .................... 312,100
Investments—trading (Note 3) ............................ ..................... 100,000
Land ........................................................................ ..................... 950,000
Accounts receivable .............................................. ..................... 170,000
Investments in shares (FV-OCI) (Note 4) .............. ...................... 87,000
Cash ....................................................................... ...................... 175,900
Assets allocated to trustee for plant expansion
Cash ..................................................................... ........................ 120,000
Treasury notes, at cost and fair value ..................... ............      138,000
                                                                                                       $3,763,000
Equities  
Notes payable (Note 4) ............................................................ $ 600,000
Common shares, unlimited authorized, 500,000 issued .......  730,000
Retained earnings ........................................................................ 958,000
Accounts payable ........................................................................  420,000
Appreciation capital (Note 2) ...................................................... 570,000
Income tax payable ........................................................................ 75,000
Reserve for depreciation of building .....................................     410,000
                                                                                                       $3,763,000

Note 1: Goodwill in the amount of $70,000 was recognized because the company believed that the carrying amount of assets was not an accurate representation of the company’s fair value. The gain of $70,000 was credited to Retained Earnings.

Note 2: Buildings are stated at cost, except for one building that was recorded at its appraised value as management determined the building to be worth more than originally paid at acquisition. The excess of the appraisal value over cost was $570,000. Depreciation has been recorded based on cost.

Note 3: Investments—trading are FV-NI (fair value through net income) investments and have a fair value of $75,000. Investments in shares (FV-OCI) have a fair value of $200,000. Both investments are currently recorded at cost.

Note 4: Notes payable are long-term except for the current principal instalment due of $100,000.

Instructions

a. Prepare a corrected classified statement of financial position in good form. The notes above are for information only. Assume that you have decided not to use the revaluation model for property, plant, and equipment.

b. Digging Deeper From the perspective of a user of Delacosta’s statement of financial position, discuss the importance of proper accounting for goodwill.