On May 31 2018 Griffin Company paid 3500000 to acquire Wrigh

On May 31, 2018, Griffin Company paid $3,500,000 to acquire Wright Corporation, which became the Wright Division of Griffin. Wright reported the following balance sheet at the time of the acquisition: Current liabilities Long-term liabilities $ 600,000 500,000 Cash Accounts Receivable Equipment (net) Building (net) $ 900,000 700,000 500,000 1500,000 Stockholders\' equity Total liabilities and $3.600.000 stockholders\' equity $3,600.000 Total assets t the date of the purchase it was determined that the carrying value of the assets and liabilities of Wright were equal to their fair values except that the Building was undervalued by $600,000, REQUIRED: Compute the amount of goodwill recognized, if any, on May 31, 2018 and prepare the journal entry. 00.00D 2IDo 4oo,oo0 3,500,go0 Part B: At December 31, 2019, the Wright Division reports the following balance sheet information: Cash Accounts Receivable Equipment (net) $700,000 500,000 450,000 1,890,000 Building Goodwill Current liabilities Long-term liabilities 800,000 700,000 ined that the fair value of the Wright Division is $2,700,000. The recorded amount for Wright Division\'s assets and liabilities are the same as fair value, except for Equipment, which has a fair value of $50,000 above the carrying value.

Solution

SOLUTION:- calculation of the amount of goodwill:-

cash=$900000

accounts receivables=$700000

equipment=$500000

building=$900000

goodwill=$1600000

less: current liabilities=$600000

less: long term liabilities=$500000

less: purchase consideration=$3500000

* building is taken at revalued figures i.e $1500000-$600000=$900000