Reference no: EM132839969

Question - ABC123 Inc has decided to purchase 100% the voting shares of DEF456 for $400,000 in cash on July 1, 2019. On the date, the balance sheets of each of these companies were as follows:

	ABC123 Inc	DEF456 Inc
Cash and Short-Term Securities	$900,000	$200,000
Inventory	$50,000	$120,000
Plant and Equipment (net)	$350,000	$150,000
Goodwill	$ -	$80,000
Total Assets	$1,300,000	$550,000
Current Liabilities	$180,000	$160,000
Bonds Payable	$400,000	$100,000
Common Shares	$500,000	$200,000
Retained Earnings	$220,000	$90,000
Total Liabilities and Equity	$1,300,000	$550,000

On that date, the fair values of DEF456 Assets and Liabilities were as follows:

Cash and Short-Term Securities	$200,000
Inventory	$90,000
Plant and Equipment (net)	$250,000
Current Liabilities	$160,000
Bonds Payable	$88,000

In addition to the above, an independent appraiser deemed that DEF456 Inc. had trademarks with a fair market value of $100,000 which had not been accounted for. In turn, ABC123's fair market values were equal to their book values with the exception of the Company's Inventory and Plant and Equipment, which were said to have Fair Market Values of $30,000 and $480,000, respectively.

Required - Based on the information provided:

a) Calculate the amount of Goodwill arising from this combination.

b) Prepare the journal entry to record ABC123's acquisition of DEF456's shares.

c) Prepare ABC123's Consolidated Balance Sheet immediately following its acquisition of DEF123's voting shares.