Arizona Corporation acquired the business Data Systems for $310,000 cash and assumed all liabilities at the date of purchase. Data's books showed tangible assets of $320,000, liabilities of $17,000, and stockholders' equity of $303,000. An appraiser assessed the fair market value of the tangible assets at $300,000 and liabilities at $17,000 at the date of acquisition. Arizona Corporation's financial condition just prior to the acquisition is shown in the following statements model. Balance Income Sheet Statement Assets Cash = + Liabilities + Tangible Assets ΝΑ Stockholders 'Equity + Goodwill + ΝΑ Revenue Expenses = ΝΑ + Statement of Cash Flows Net Income 520,000 NA 520,000 + Required 1.Compute the amount of goodwill acquired. 2.Record the acquisition in a financial statements model. Arizona Corporation's financial condition just prior to the acquisition is shown in the financial statements model. 3.Record the acquisition in general journal format. ΝΑ = ΝΑ ΝΑ

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Arizona Corporation acquired the business Data Systems for $310,000 cash and assumed all liabilities at the date of
purchase. Data's books showed tangible assets of $320,000, liabilities of $17,000, and stockholders' equity of $303,000. An
appraiser assessed the fair market value of the tangible assets at $300,000 and liabilities at $17,000 at the date of
acquisition. Arizona Corporation's financial condition just prior to the acquisition is shown in the following statements
model.
Balance Income
Sheet Statement
Assets
Cash
=
+
Liabilities +
Tangible
Assets
ΝΑ
+
Stockholders
Equity
Goodwill
Revenue Expenses =
+ ΝΑ
=
ΝΑ +
Net
Income
520,000 +
Required
1.Compute the amount of goodwill acquired.
2.Record the acquisition in a financial statements model. Arizona Corporation's financial condition just prior to the
acquisition is shown in the financial statements model.
3.Record the acquisition in general journal format.
520,000 NA
Statement
of Cash
Flows
ΝΑ
=
ΝΑ ΝΑ
Transcribed Image Text:Arizona Corporation acquired the business Data Systems for $310,000 cash and assumed all liabilities at the date of purchase. Data's books showed tangible assets of $320,000, liabilities of $17,000, and stockholders' equity of $303,000. An appraiser assessed the fair market value of the tangible assets at $300,000 and liabilities at $17,000 at the date of acquisition. Arizona Corporation's financial condition just prior to the acquisition is shown in the following statements model. Balance Income Sheet Statement Assets Cash = + Liabilities + Tangible Assets ΝΑ + Stockholders Equity Goodwill Revenue Expenses = + ΝΑ = ΝΑ + Net Income 520,000 + Required 1.Compute the amount of goodwill acquired. 2.Record the acquisition in a financial statements model. Arizona Corporation's financial condition just prior to the acquisition is shown in the financial statements model. 3.Record the acquisition in general journal format. 520,000 NA Statement of Cash Flows ΝΑ = ΝΑ ΝΑ
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