PPP Manufacturing Company decided to expand further by purchasing STU Company. The balance sheet of WWW Company as of December 31, 2015 was a follows:
December 31 , 2015
|Assets||Liabilities and Equities|
|Total Assets||$2,060,000||Total Liabilities and Equities||$2,060,000|
An appraisal, agreed to by the parties, indicated that fair value of the acquired inventory was $370,000 and that the fair value of the acquired PP&E assets was $1,325,000. The fair value of the acquired receivables is equal to the amount reported on the balance sheet. The agreed-upon purchase price was $2,275,000, and this amount was paid in cash to the previous owners of STU Company.
Determine the amount of goodwill (if any) implied in the purchase price of $2,275,000. Show your calculations. Using the attached T-account template, prepare the acquiring company’s journal entry to record the acquisition. Do not debit investments; rather debit and credit the assets acquired and the liabilities assumed.
Property, Plant &