On January 2, 2014, Eagle Company Acquired 100% of Solly

question 39

Essay

On January 2, 2014, Eagle Company acquired 100% of Solly Company's common stock for $900,000 cash in a merger transaction. At this date, the book value of all of Solly Company's assets, except a building, was $700,000. The fair value of these assets without the building was $800,000. In addition to these assets is a building that has a book value of $400,000 and a fair value of $440,000. The book value and fair value of Solly's liabilities is $520,000.
Required:
A. Prepare a schedule to calculate the goodwill arising from the transaction.
B. Prepare the journal entry to record the merger on the books of Eagle Company at the acquisition date.

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Definitions:

Operating Systems

The software that manages the hardware and software resources of a computer, providing a foundation upon which applications can be run.

Exclusive Territory

An agreed area or market where only one distributor, franchisee, or sales agent has the right to operate or sell specific products.

Predatory Pricing

The practice of selling a product or service at a very low price with the intent of driving competitors out of the market or hindering their ability to compete.

Supreme Court

The highest judicial court in a country or state, typically having the final word on legal decisions.