On January 1, 20x1, HISTRIONAL Co. acquired all of the identifiable assets and assumed all...
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Accounting
On January 1, 20x1, HISTRIONAL Co. acquired all of the identifiable assets and assumed all of the liabilities of THEATRICAL, Inc. by paying cash of 2,000,000. On this date, the identifiable assets acquired and liabilities assumed have fair values of 3,200,000 and 1,800,000, respectively. As of January 1, 20x1, HISTRIONAL holds a building and a patent which are being rented out to THEATRICAL, Inc. under operating leases. HISTRIONAL has determined that the terms of the operating lease on the building compared with market terms are favorable. The fair value of the differential is estimated at 40,000. Compute for the goodwill (gain on bargain purchase).
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