-Betta Group purchased? Danio, Inc. for $ $880,000 The market value of? Danio\'s

Question

-Betta Group purchased? Danio, Inc. for $ $880,000 The market value of? Danio's assets and liabilities at the time of purchase were $960,000 and $320,000 respectively. The journal entry to record this will? include

. A.

debit to Asset accounts for

$960,000?,

credit to Gain on Investments

$80,000

and credit to Cash

$880,000.

B.

debit to Investments for

$960,000?,

credit to Cash

$880,000

and credit to Gain on Investment

$80,000.

C.

$960,000?,

debit to Goodwill

$240,000?,

credit to Liabilities

$320,000

and credit to Cash

$880,000.

D.

debit to Investments for

$880,000?,

credit to Cash

$880,000.

Explanation / Answer

Beta Group purchased Danio Inc For $ 880000, but net value of Danio Inc is $ 640000 ($960000 Asset -$320000 Liabilities), hence we can say that beta group are paying extra $220000 ($880000-$640000) than actual net value of asset, further we can say that Beta Group paying extra of $220000 is for Danio Ins's Goodwill ( May be brandvalue, tradename etc.) therefore journal entry will be.

debit to investment for

$960,000,

debit to Goodwill

$240,000,

credit to Liabilities

$320,000

and credit to Cash

$880,000.

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