Nike Inc. acquired Under Armor Corp. on August 1, 2020. The total purchase price of the acquisition was $3,500,000. Under Armor will become a division of Nike post-acquisition.Under Armor's balance sheet at the date of acquisition was as follows:

 At the date of acquisition, the book value of the assets approximated fair value except for the patent. The fair value of the patent is $750,000 at the acquisition date.

 
Compute the amount of goodwill recognized by Nike as a result of the acquisition.

Prepare the August 1st journal entry for Nike to record the purchase of Under Armor.

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Assets Accounts receivable, net Inventory Equipment, net Building, net Patent Total Assets 350,000 480,000 850,000 1,200,000 250,000 3,130,000 Liabilities & Stockholders' Equity Accounts payable 175,000 Bond payable 525,000 Common stock 10,000 Paid-in caputal Retained earnings Total liab. & S.E. 590,000 1,830,000 3,130,000 Assets Accounts receivable, net Inventory Equipment, net Building, net Patent Total Assets 350,000 480,000 850,000 1,200,000 250,000 3,130,000 Liabilities & Stockholders' Equity Accounts payable 175,000 Bond payable 525,000 Common stock 10,000 Paid-in caputal Retained earnings Total liab. & S.E. 590,000 1,830,000 3,130,000

Answer rating: 100% (QA)

To compute the amount of goodwill recognized by Nike as a result of the acquisition we need to deter... View the full answer