Arizona Corp had the following account balances at 12 1 19 Receivables $96,000 Inventory $240,000 Land $720,000 Building $600,000 Liabilities $480,000 Common stock $120,000 Additional paid in capital $120,000 Retained earnings, 12 1 19 $840,000 Revenues $360,000 and Expenses $264,000 Several of Ari...

In that case there is negative goodwill ie bargain purchase on the a ...

Arizona Corp. had the following account balances at 12/1/19: Receivables: $96,000; Inventory: $240,000; Land: $720,000; Building: $600,000;

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Question:

Arizona Corp. had the following account balances at 12/1/19:

Receivables: $96,000; Inventory: $240,000; Land: $720,000; Building: $600,000; Liabilities: $480,000; Common stock: $120,000; Additional paid-in capital: $120,000; Retained earnings, 12/1/19: $840,000; Revenues: $360,000; and Expenses: $264,000.

Several of Arizona's accounts have fair values that differ from book value. The fair values are:

Land — $480,000; Building — $720,000; Inventory — $336,000; and Liabilities — $396,000.

Inglewood Inc. acquired all of the outstanding common shares of Arizona by issuing 20,000 shares of common stock having a $6 par value, but a $66 fair value. Stock issuance costs amounted to $12,000.

Required:

Prepare a fair value allocation and goodwill schedule at the date of the acquisition.
Imagine you are the decision maker at Inglewood Inc. Determine in 525- words whether you would encourage acquiring Arizona Corp? Be sure to include your rationale.