On January 1,20X7,Falcon Acquired the Net Assets of Intra for $3,400,000

question 27

Essay

On January 1,20X7,Falcon acquired the net assets of Intra for $3,400,000 with the issue of shares.The statement of financial position for Intra at the date of acquisition is shown below together with estimated of the fair values of Intra's recorded assets and liabilities.
Required:
What is the amount of goodwill to be recorded for this business combination?
Prepare the journal entry that Falcon will use to record the business combination.Prepare the statement of financial position for Intra on January 1,20X7 directly after the transaction is completed.Reconcile the book value of the retained earnings for Intra on December 31,20X6 to its balance on January 1,20X7.Explain any differences.

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Definitions:

Account Balances

The amount of money in an account at a specific point in time, reflecting all transactions.

Credits

An accounting entry that either decreases assets or increases liabilities and equity on the company's balance sheet.

Debits

An entry recorded on the left side of a double-entry bookkeeping system that increases asset and expense accounts, and decreases liability, equity, and revenue accounts.

Journal

A chronological record of all the financial transactions of a business, used for the process of accounting.