On February 1, 2X09, Bodner, Inc. acquired a 100% interest in Bolenski Company by paying $34 million for 100% of the outstanding stock of Bolenski Company. The book value of the net assets amounted to $25 million, but an independent appraiser valued the printing press at $1.5 million over its book value. The book value and fair value of the remaining assets and liabilities were equal. Required:
1. On February 1, 2X09, prepare the eliminating entry by Bodner, Inc. after the acquisition.
2. What will occur if the goodwill decreases in value after the acquisition?
(1). Entries on february 1, 2x09 ( In $ million)
(1). Bolenski company A/C debit $34
To Bolenski liquidator A/C $34
( Being Business purchase)
(2). Assets Account Debit $26.5
Goodwill Account Debit $7.5
To Bolenski company A/C $34
(Being assets record )
(3). Bolenski liquidator A/C Debit $34
To Bank Account A/C $34
(Being Payment made)
(2). If Goodwill decrease in value after the acquisition then it will be write off over a period of time but at the time of purchase it will be recorded.
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