On March 1, 2020, Dorsey Corporation purchased Johnson Company. The book and fair value of Johnson's balance sheet accounts is shown below. Record the purchase on Dorsey's books under each of the following independent assumptions. a. Dorsey paid Johnson $1,000,000 b. Dorsey paid Johnson $700,000 Book Value Fair Value Cash 50,000 50,000 Accounts Receivable 90,000 75,000 Inventory Equipment Buildings 125,000 175,000 70,000 100,000 75,000 95,000 Land 600,000 700,000 Accounts Payable Note Payable Retained Earnings 200,000 200,000 100,000 100,000 315,000 315,000 Common Stock 15,000 250,000 Paid in Capital 380,000 380,000

On March 1, 2020, Dorsey Corporation purchased Johnson Company. The book and fair value of Johnson's balance sheet accounts is shown below. Record the purchase on Dorsey's books under each of the following independent assumptions. a. Dorsey paid Johnson $1,000,000 b. Dorsey paid Johnson $700,000 Book Value Fair Value Cash 50,000 50,000 Accounts Receivable 90,000 75,000 Inventory Equipment Buildings 125,000 175,000 70,000 100,000 75,000 95,000 Land 600,000 700,000 Accounts Payable Note Payable Retained Earnings 200,000 200,000 100,000 100,000 315,000 315,000 Common Stock 15,000 250,000 Paid in Capital 380,000 380,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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COMPUTE THE GOODWILL.
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