1. Prepare a presentation showing in good form the calculation of Goodwill in this transaction. 2. Explain the rational for your calculations.

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.