On January 1, 2010, Simpson Company Purchased All of the Assets

question 37

Essay

On January 1, 2010, Simpson Company purchased all of the assets and assumed all of the liabilities of Dobson Company for $400,000. Dobson's balance sheet showed total assets of $450,000 and total liabilities of $210,000 of this date. An appraiser determined all assets except for land are valued at fair market value. The land is worth $20,000 more than its book value.
A. Calculate goodwill in connection with this business combination.
B. Prepare the journal entry to record the combination.

---

Definitions:

Salvage Value

The forecasted sell-off price of an asset after its serviceable life has ended.

Natural Resources

Raw materials obtained from the Earth, which are utilized in the production of goods and services.

Standing Timber

Trees that are currently growing and not yet harvested, considered as assets for companies in the forestry industry.

Underground Deposits

Natural accumulations of minerals, oil, gas, or water located beneath the earth's surface which can be extracted for use or sale.