Chapter 11, Problem 11.25E

a.

To determine

Amount of goodwill to be recorded on the date of acquisition.

Given Information:

Cost of acquisition for the company’s voting common stock is $5,000,000.

Appraised value of net asset is $1,400,000 more than the book value.

Book value of the assets is 5,574,900.

Liabilities amounted to $4,324,900.

b.

To determine

The way goodwill is accounted after the date of acquisition.