Provide the journal entry to record the purchase

Reference no: EM131410764

On January 1, 2011, Diversified Industries purchased Specialists, Inc. for $1.8 million. The balance sheet of Specialists, Inc. at the time of purchase follows:

The total FMV of the individual assets of Specialists is $1.35 million, and the liabilities are valued on the balance sheet at FMV.

REQUIRED:

a. How can the FMV of Specialists' assets exceed the value of the assets on the balance sheet?

b. Why would Diversified pay more for Specialists than the FMV of the assets less the liabilities?

c. Provide the journal entry to record the purchase. .

d. In the recent past goodwill was amortized over a period of time not to exceed forty years. Provide an argument to challenge this position.

Reference no: EM131410764

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