On January 1, 2016 Gearty Corporation acquired 100% of Olinto Corporation. Gearty Corp. paid $760,000 for the acquisition of all of Olinto’s stock. On the date of acquisition Olinto’s assets and liabilities equaled their book value except for land and equipment. The land had a fair value that was $30,000 greater than its book value. The fair value of Olinto Corp.’s equipment was $90,000 greater than its book value. The equipment has a remaining life of 8 years.

Gearty’s Stockholder’s Equity is as follows: Common stock $660,000; Additional paid in capital $70,000; Retained earnings $390,000.

Olinto’s Stockholder’s Equity is as follows: Common stock $210,000; Additional paid in capital $90,000; Retained earnings $240,000.

REQUIRED:

Calculate the amount of Goodwill or Gain that resulted from the acquisition.

Prepare the workpaper eliminating journal entries.

Show your work, i.e. what numbers were added, subtracted, multiplied or divided to arrive at your solution. Partial credit is given for responses to this question IF supporting calculations are provided. NO points are given if work is not provided.

You may use the following format for your journal entries. Designate which accounts are debited or credited, include the account name and the amount.

Debit: Interest revenue $400

Credit: Interest payable $200

Credit: Cash $200