Prepare journal entries associated with purchase of raybeams

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On January 1, 2020, Sun Ltd. acquired RayBeams Corp. for a cash payment of $1,000,000. At the time of purchase, RayBeams' statement of financial position showed assets of $1,225,000, liabilities of $520,000, and owners' equity of $705,000. The fair value of RayBeams' assets is estimated to be $1,550,000 and the fair value of RayBeams' liabilities is estimated to be $535,000.

Problem 1: Based on the information above, calculate the amount of goodwill, if any, that was acquired by Sun Ltd.

Problem 2: Based on the information above, prepare journal entries associated with the purchase of RayBeams on January 1, 2020.

Reference no: EM132739551

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