On January 1, 2003, Universal Company purchased the following assets and liabilities from Grand Company for $250,000:
|
Book |
Fair Market |
|
|
Value |
Value |
|
|
Inventory |
$40,000 |
$50,000 |
|
Building |
80,000 |
100,000 |
|
Land |
50,000 |
60,000 |
|
Accounts receivable |
20,000 |
20,000 |
|
Accounts payable. |
(10,000) |
(10,000) |
1. Prepare a journal entry to record the purchase of Grand by Universal.
2. Record amortization of goodwill as of December 31, 2003. (Assume a 40 year amortization period for the goodwill.)