Asked by Megan Carlson on Jul 04, 2024
Verified
Farah Corp. purchased 35% of the common stock of Dastan Co. by paying $625,000. Of this amount, $45,000 is associated with goodwill.Required: Prepare the journal entry to record Farah's investment.
Goodwill
An intangible asset that represents the excess value of an acquired company over the fair value of its identifiable assets and liabilities, often related to brand reputation or customer relationships.
Common Stock
A type of equity security that represents ownership in a corporation, including voting rights and a share in the company's profits through dividends.
- Attain proficiency in and execute the equity method for investment accounting purposes.
- Identify the appropriate worth of investments and modify for additional cost above book value related to particular intangible assets and goodwill.
Verified Answer
RJ
recha joshiJul 10, 2024
Final Answer :
The journal entry is: 
The amount of goodwill does not affect the journal entry used to record the investment.
The amount of goodwill does not affect the journal entry used to record the investment.
Learning Objectives
- Attain proficiency in and execute the equity method for investment accounting purposes.
- Identify the appropriate worth of investments and modify for additional cost above book value related to particular intangible assets and goodwill.