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Check my work Problem 7-3B Calculate and record goodwill (LO7-2) 1.66 points Northern Equipment Corporation purchased...

Question:

Check my work Problem 7-3B Calculate and record goodwill (LO7-2) 1.66 points Northern Equipment Corporation purchased all the2. Record Northern Equipments acquisition of Pioneer Equipment Rental. (If no entry is required for a transaction/event, sel

Check my work Problem 7-3B Calculate and record goodwill (LO7-2) 1.66 points Northern Equipment Corporation purchased all the outstanding common stock of Pioneer Equipment Rental for $5,430,000 in cash. The book values and fair values of Pioneer's assets and liabilities were: Book Value $ 580,000 3,930,000 120,000 (920,000) $3,710,000 Accounts Receivable Buildings Equipment Accounts Payable Net assets Fair Value $ 480,000 4,630,000 210,000 (920,000) $4,400,000 eBook Print Required: 1. Calculate the amount Northern Equipment should report for goodwill. References Goodwill Goodwill
2. Record Northern Equipment's acquisition of Pioneer Equipment Rental. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record the acquisition of Pioneer Equipment Rental. Note: Enter debits before credits. Transaction General Journal Debit Credit Record entry Clear entry View general journal

Answers

1. Goodwill          [Refer working note] $1,030,000
2. Journal entry to record the acquisition of Pioneer equipment rentals
Account Titles and Explanation Debit Credit
Accounts receivable $480,000
Buildings $4,630,000
Equipment $210,000
Goodwill               [Refer working note] $1,030,000
     Accounts Payable $920,000
     Cash $5,430,000
(To record the acquisition of Pioneer equipment rentals)

.

.

Working note - Calculation of gain (or) loss on acquisition
Purchase price $5,430,000
Less: Fair value of net assets acquired [Assets - Liabilities] ($4,400,000)
Loss on acquisition     (Goodwill) $1,030,000
.

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