Answer:
a. Dr goodwill; credit building for $8,000,000
Explanation:
Goodwill refers to excess of purchase consideration over net assets value of an entity in case of acquisition.
Goodwill is an intangible asset which is recorded as follows on the date of acquisition.
Journal entry for Goodwill is;
Goodwill A/C Dr
Net Assets Acquired Dr.
To Purchase Consideration
(Being goodwill recorded)
In the given case, building was acquired for $15,000,000 against it's fair value which was only $7,000,000. The excess price paid for such acquisition represents goodwill which shall be recorded as;
Goodwill A/C ($15,000,000- $7,000,000) Dr. $8,000,000
To Building $8,000,000
(Being goodwill recorded)
