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Prepare the journal entry necessary on january

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Reference no: EM132935327

Marino Company had the following balance sheet on January 1, 2016:

Marino Company Balance Sheet January 1, 2016

1. Cash $20,000.00 Accounts payable $20,000.00

2. Inventory 30,000.00 Notes payable $100,000.00

3. Property, plant, and equipment $200,000.00

4. Patent $20,000.00 Shareholders' equity $150,000.00

5 $270,000.00 $270,000.00

On January 1, 2016, Paul Company purchased Marino by acquiring all its outstanding shares for $300,000 cash. On that date, the fair value of the inventory was $20,000, and the fair value of the equipment was $250,000. In addition, the fair value of a previously unrecorded customer list was $25,000. For all other amounts, the book value of January 1, 2016, equaled fair value.

Required:

Problem 1. Compute the goodwill associated with the purchase of Marino.

Problem 2. Prepare the journal entry necessary on January 1, 2016, to record the acquisition of Marino.

Reference no: EM132935327

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