Question

On January 4, David Company acquired all of the net assets (assets and liabilities) of William Company for $ 145,000 cash. The two companies merged, with David Company surviving. On the date of acquisition, William's balance sheet included the following.
The property and equipment had a fair value of $ 85,000 . William also owned an internally developed patent with a fair value of $ 3,000 . The book values of the cash and liabilities were equal to their fair values.
Required:
(b) Give the journal entry that David would make to record the merger on January 4. "

Answer 1

Assets are what a business owns and liabilities are what an enterprise owes. both are indexed on a business enterprise's stability sheet,

Calculation of goodwill gain and bargain purchase:-

Particulars                                                                            Amount

Assets :                                                                              

         cash                                                                            $ 23,000                            

       property & equipment                                                   85,000

 internally developed patent                                                3,000

     Total assets                                                                     $ 111,00

Less: Liabilities                                                                     ( 16000 )

Net assets of William co.                                                      $ 95,000

Purchase consideration paid                                               $ 145,000

goodwill [ purchase consideration-net assets ]                  $ 50,000

  Notes

The assets & Liabilities of the Acquiree are recorded at fair value in the books of the acquiree.

Internally developed parent, which is acquired is expected to be identifiable. Hence recognized in Books. recorded at is books of Acquiror. an economic assertion that suggests an enterprise's economic fitness. belongings minus liabilities equals fairness or a proprietor's net worth. present-day and long-term liabilities are going to be the maximum not unusual ones that you see for your enterprise.

Learn more about Liabilities here:-brainly.com/question/12240150

#SPJ4