Reference no: EM132648159

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.

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

Purchase Consideration (20,000 '66)		1320000
Less Book value of net assets acquired
receivables	96000
Inventory	240000
Land	720000
Building	600000
Liabilities	480000	1176000
Excess fair value and book value		144000
Less Fair value adjustments
Land ($480,000-$720,000)	-240000
Building ($720,000-5600000)	120000
Inventory ($336,000-$240,000)	96000
Liabilities (5-396,000 ♦480,000)	84000	60000
Goodwill		84000