Vasquez Manufacturing Company decided to expand further by purchasing Wasserman Company. The statement of financial position of Wasserman Company as of 31 December 2020 was as follows: Wasserman Company Statement of Financial Position 31 December 2020 Assets Plant assets (net) Inventory Receivables RM1,025,000 275,000 550,000 210.000 Equity and Liabilities Share capital-ordinary Retained earnings Accounts payable RM 800,000 885,000 375.000 Cash Total assets RM2,060,000 Total equity and liabilities RM2,060,000 An appraisal, agreed to by the parties, indicated that the fair value of the inventory was RM350,000 and the fair value of the plant assets was RM1,125,000. The fair value of the receivables is equal to the amount reported on the statement of financial position. The agreed purchase price was RM2,095,000, and this amount was paid in cash to the previous owners of Wasserman Company. REQUIRED: Determine the amount of goodwill (if any) implied in the purchase price of RM2,095,000. Show calculations. Prepare journal entry.

Vasquez Manufacturing Company decided to expand further by purchasing Wasserman Company. The statement of financial position of Wasserman Company as of 31 December 2020 was as follows: Wasserman Company Statement of Financial Position 31 December 2020 Assets Plant assets (net) Inventory Receivables RM1,025,000 275,000 550,000 210.000 Equity and Liabilities Share capital-ordinary Retained earnings Accounts payable RM 800,000 885,000 375.000 Cash Total assets RM2,060,000 Total equity and liabilities RM2,060,000 An appraisal, agreed to by the parties, indicated that the fair value of the inventory was RM350,000 and the fair value of the plant assets was RM1,125,000. The fair value of the receivables is equal to the amount reported on the statement of financial position. The agreed purchase price was RM2,095,000, and this amount was paid in cash to the previous owners of Wasserman Company. REQUIRED: Determine the amount of goodwill (if any) implied in the purchase price of RM2,095,000. Show calculations. Prepare journal entry.

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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