1. Lion Company is considering the acquisition of Tiger Company, Inc. in early 2018. To assess the amount it might be willing to pay, Lion Company makes the following calculations and assumptions.

1. The revenue of Tiger Company for the year 2014 to 2017 was OMR 180,000, OMR 180,000, OMR 200,000, OMR 250,000 and total revenue of OMR 810,000 respectively. Lion Company believes that an average of these earnings represents a fair estimate of annual earnings for the indefinite future. Depreciation of office buildings and plant and equipment each year OMR 350,000 and 150,000. Extraordinary profit of the Company in the year of 2016 OMR 100,000 and Extraordinary loss of the Company in the year of 2018 OMR 350,000.
2. Lion Company has identifiable assets with a total fair value of OMR 25,000,000 and Creditors OMR 700,000 and Accounts Payable OMR 200,000. Assets include office equipment with a fair value of approximately book value, office building with a fair value of 25% above book value, and Vehicle with a fair value of 50% above book value. The remaining lives of the assets are considered to be approximately equal to those used by the Lion Company.

Required:

The normal rate of return on net assets is 20%. The company earns a 25% return on its investment. Fair value of return on investment 30%. Calculate the estimated goodwill.

2. Putin Company acquired the assets and assumed the liabilities of Joni Company on January 1, 2018, paying OMR 4,500,000 in cash. Immediately prior to the acquisition, Joni Company's balance sheet was as follows:

BOOK VALUE FAIR VALUE

Accounts receivable 240,000 220,000

Inventory 290,000 320,000

Land 960,000 1,508,000

Buildings 1,020,000 1,392,000

Total 2.510.000 3.440.000

Accounts payable 270,000 270,000

Document payable 600,000 600,000

Common Stock, $5 for 420,000

Other contributed capital 640,000

Retained earnings 580,000

Total 2.510.000

Required :

1. Prepare journal entries in the Putin Company books to record the purchase of Joni Company's assets and assumption of its liabilities, assuming the amount paid was 900,000 OMR.
2. Repeat the requirement in (A) assuming the amount paid was OMR 400,000 except in cash.