On January 2, 2016, Eagle Company Acquired 100% of Solly

Essay

On January 2, 2016, Eagle Company acquired 100% of Solly Company's common stock for $900,000 cash in a merger transaction. At this date, the book value of all of Solly Company's assets, except a building, was $700,000. The fair value of these assets without the building was $800,000. In addition to these assets is a building that has a book value of $400,000 and a fair value of $440,000. The book value and fair value of Solly Company's liabilities is $520,000.
Required:
A.Prepare a schedule to calculate the goodwill arising from the transaction.
B.Prepare the journal entry to record the merger on the books of Eagle Company at the acquisition date.