12) Passcode Incorporated acquired 90% of Safe Systems International for $540,000, the market value at that time. On the date of acquisition, Safe Systems showed the following balances on their ledger:
Book ValueFair Value
Current Assets$200,000$200,000
Buildings290,000320,000
Equipment410,000430,000
Liabilities(350,000)(360,000)
Safe Systems has determined that their buildings have a remaining life of 10 years, and their equipment has a remaining useful life of 8 years.
Requirement 1: Calculate the amount of goodwill that will appear on the general ledger of Passcode and Safe Systems, as well as the amount that will appear on the consolidated financial statements.
Requirement 2: Calculate the amount of amortization that will appear on the consolidated financial statements for buildings and equipment, and explain how this amortization of excess fair value is
