Workpaper eliminating journal entries

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Reference no: EM131262506

On January 1, 2016 Gearty Corporation acquired 100% of Olinto Corporation. Gearty Corp. paid $2,500,000 for the acquisition of all of Olinto’s stock. On the date of acquisition Olinto’s assets and liabilities equaled their book value except for land. The land had a fair value that was $200,000 greater than its book value. The fair value of Olinto Corp.’s identifiable intangibles is $100,000. The identifiable intangible has a remaining life of 8 years. Gearty’s Stockholder’s Equity is as follows: Common stock $5,000,000; Additional paid in capital $1,000,000; Retained earnings $3,000,000. Olinto’s Stockholder’s Equity is as follows: Common stock $1,000,000; Additional paid in capital $400,000; Retained earnings $500,000. REQUIRED: Calculate the amount of Goodwill or Gain that resulted from the acquisition. Prepare the workpaper eliminating journal entries.

Reference no: EM131262506

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