Reference no: EM132704931

Arizona Corp. had the following account balances at 12/1/19:

Receivables: $96,000;

Inventory: $240,000;

Land: $720,000;

Building: $600,000;

Liabilities: $480,000;

Common stock: $120,000;

Additional paid-in capital: $120,000;

Retained earnings, 12/1/19: $840,000;

Revenues: $360,000; and Expenses: $264,000.

Several of Arizona's accounts have fair values that differ from book value. The fair values are:

Land - $480,000;

Building - $720,000;

Inventory - $336,000; and

Liabilities - $396,000.

Inglewood Inc. acquired all of the outstanding common shares of Arizona by issuing 20,000 shares of common stock having a $6 par value, but a $66 fair value. Stock issuance costs amounted to $12,000.

Required:

Question 1: Need a fair value allocation and goodwill schedule at the date of the acquisition.

Question 2: Imagine you are the decision maker at Inglewood Inc. Determine whether you would encourage acquiring Arizona Corp? Be sure to include your rationale.