paid to acquire , a weekly advertising paper. At the time of the acquisition, 's balance sheet reported total assets of and liabilities of . The fair market value of 's assets was . The fair market value of 's liabilities was . Read the requirementsLOADING Requirement 1. How much goodwill did purchase as part of the acquisition of ? Purchase price to acquire Mesa Herald Market value of Mesa Herald's assets Less: Market value of Mesa Herald's liabilities Less: Market value of Mesa Herald's net assets

Full question attached

Answer and Explanation:

A. Given that Thrifty Nickels Assets fair value and liabilities are given by $100000 and $70000 respectively(we do not use the book value in calculating goodwill here) and Acquisition value is $230000

Goodwill = purchase price -net assets

Since we know purchase price =$230000

We calculate net assets= total assets -total liabilities

Total assets =$100000

Total liabilities =$70000

Net assets=$100000-$70000=$30000

We substitute in goodwill formula

Goodwill=$230000-$30000=$200000

Therefore goodwill =$200000

B. We journalize entries for the acquisition in Deca's books as follows :

Debit Assets $100000

Debit Goodwill $200000

Credit liabilities $70000

Credit cash $230000

We debit assets since it received and increased by $100000,we debit goodwill since it also received and increased by $200000. We credit liabilities since it also increased by $70000 from the acquisition (liabilities accounts are credited). Cash was spent and therefore is credited since it reduced by $230000

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