Venti Manufacturing Company decided to expand further by purchasing Wasserman Company. The statement of financial position of Warrior Company as of 31 December 2020 was as follows: Warrior Company Statement of Financial Position 31 December 2020 Assets RM Equity and Liabilities RM Plant assets (net) 1,025,000 Share capital-ordinary 800,000 Inventory 275,000 Retained earnings 885,000 Receivables 550,000 Accounts payable 375,000 Cash 210,000 Total assets 2,060,000 Total equity & liabilities 2,060,000 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 Warrior Company. REQUIRED: Determine the amount of goodwill (if any) implied in the purchase price of RM2,095,000. Show calculations and explain. Prepare journal entry.
Venti Manufacturing Company decided to expand further by purchasing Wasserman Company.
The
Warrior Company
Statement of Financial Position
31 December 2020
| Assets | RM | Equity and Liabilities | RM |
| Plant assets (net) | 1,025,000 | Share capital-ordinary | 800,000 |
| Inventory | 275,000 | 885,000 | |
| Receivables | 550,000 | Accounts payable | 375,000 |
| Cash | 210,000 | ||
| Total assets | 2,060,000 | Total equity & liabilities | 2,060,000 |
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 Warrior Company.
REQUIRED:
Determine the amount of
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