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Arizona Corp. acquired the business Data Systems for $320,000 cash and assumed all liabilities at the...

Arizona Corp. acquired the business Data Systems for $320,000 cash and assumed all liabilities at the date of purchase. Data’s books showed Equipment of $260,000, Accounts Payable of $40,000, and Common Stock of $220,000. An appraiser assessed the fair market value of the equipment at $250,000 at the date of acquisition. Just prior to the acquisition, Arizona Corp. had $450,000 in Cash and Common Stock.  

At what value will Arizona required the equipment?

What value did Arizona assign to goodwill?

How much Goodwill is amortized or written-off in the year of acquisition?

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Answer #1
Goodwill valuation :
Sr no Particulars Amount
1 cost of acquiring the business 320000
2 Market value of equipment 250000
3 common stock 0
4 Total Asset value (2+3) 250000
Liability:
5 Account Payables 40000
6 Busines value (4-5) 210000
A Goodwill ((1)-(6)) 110000
B Value of equiment to be considered is it fair value 250000
C Goodwill Amortization is not Allowed as per US GAAP . Not Allowed
Note : Since fair value of common stock is not given it is considered absolute
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