1. Prepare a presentation showing in good form the calculation of Goodwill in this transaction. 2….

The board of Directors of Pastrana, Inc. is negotiating the purchase of Burgos Galleries. The balance sheet @ 12/31/2009 of Burgos is presented below:

Assets Liabilities & Stockholder s Equity

Cash $ 70,000 Notes Payable $ 50,000

Land $ 100,000 Account Payable $ 300,000

Equipment $ 375,000 Total Liabilities $ 350,000

Intangible Assets $ 30,000 Common Stocks $ 200,000

________ Retained Earnings $ 25,000 $ 225,000

Total Assets $ 575,000 Total Liabilities & Stk s Ety $ 575,000

Additional Information:

1. Land is undervalued by $50,000.

2. Equipment is overvalued by $ 5,000. 3. Burgos agrees to sell the business to Pastrana Co. for $380,000.

Required:

1. Prepare a presentation showing in good form the calculation of Goodwill in this transaction.

2. Explain the rational for your calculations.