Arizona Corp. had the following account balances at 12/1/19:
Receivables: $96,000; Inventory: $240,000; Land: $720,000; Building: $600,000; Liabilities: $480,000; Common stock: $120,000; Additional paid-in capital: $120,000; Retained earnings, 12/1/19: $840,000; Revenues: $360,000; and Expenses: $264,000.
Several of Arizona’s accounts have fair values that differ from book value. The fair values are:
Land — $480,000; Building — $720,000; Inventory — $336,000; and Liabilities — $396,000.
Inglewood Inc. acquired all of the outstanding common shares of Arizona by issuing 20,000 shares of common stock having a $6 par value, but a $66 fair value. Stock issuance costs amounted to $12,000.
Imagine you are the decision maker at Inglewood Inc.
Prepare a fair value allocation and goodwill schedule at the date of the acquisition.
Determine in 525- words whether you would encourage acquiring Arizona Corp? Be sure to include your rationale.