On January 2, 2016, Eagle Company Acquired 100% of Solly

question 30

Essay

On January 2, 2016, 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 Company'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:

Explanation

The act of making something clear or understandable through detailed information or reasons.

Management

The process of dealing with or controlling things or people, often within a business or organization.

Scientific Management

A management theory that analyzes and synthesizes workflows to improve economic efficiency, especially labor productivity.

Frederick Taylor

A mechanical engineer who is considered the father of scientific management, focusing on improving economic efficiency and labor productivity through systematic study.