Polaris Company acquires all of the stock of SSC, Inc. for $100 million in cash. At the date of acquisition, SSC's equity consists of capital stock of $25 million, retained earnings of $40 million (credit balance), and accumulatedother comprehensive income of $5 million (credit balance). SSC's books report current assets of $20 million, equipment of $150 million, and liabilities of $100 million. Stark's assets and liabilities are reported on its books atamounts that approximate fair value, except that equipment with a book value of $20 million has a fair value of $30 million. Stark has no previously unreported identifiable intangible assets.RequiredNote: Provide all answers in millions.Note: Do not use negative signs.a. Prepare a schedule calculating the goodwill to be recognized for this acquisition.Acquisition cost$SSC's book valueExcess of acquisition cost over book value $Excess of fair value over book value:EquipmentGoodwill(E) Additional Paid-in-CapitalRetained earningsCapital stock$b. Prepare working paper eliminating entries (E) and (R) to consolidate the balance sheet accounts of Polaris and SSC at the date of acquisition.DebitCredit(R) Goodwill100 ✓70 ✓30 ✔Identifiable intangible assetsInvestment in SSCTo rouolue 55C pacote on10 ✓20 ✓EquipmentTo eliminate SSC's equity accounts against the investment accountto and liabilities to fair value2340250201000x0✔0✔145 x0✔0x30✔

Goodwill is the excess amount paid over the fair value (FV) of the net assets of the entity. It is…

a. Prepare a schedule calculating the goodwill to be recognized for this acquisition. Acquisition cost 100 70 SSC's book value Excess of acquisition cost over book value $ Excess of fair value over book value: Equipment Goodwill (E) Additional Paid-in-Capital Retained earnings Capital stock b. Prepare working paper eliminating entries (E) and (R) to consolidate the balance sheet accounts of Polaris and SSC at the date of acquisition. Debit Credit 30 ✓ (R) Goodwill 10 20 Equipment To eliminate SSC's equity accounts against the investment account Identifiable intangible assets Investment in SSC fainal > 23 40 25 0 20 10 0 0x 0 0✔ 145 X 0✔ 0x 30✔

a. Prepare a schedule calculating the goodwill to be recognized for this acquisition. Acquisition cost 100 70 SSC's book value Excess of acquisition cost over book value $ Excess of fair value over book value: Equipment Goodwill (E) Additional Paid-in-Capital Retained earnings Capital stock b. Prepare working paper eliminating entries (E) and (R) to consolidate the balance sheet accounts of Polaris and SSC at the date of acquisition. Debit Credit 30 ✓ (R) Goodwill 10 20 Equipment To eliminate SSC's equity accounts against the investment account Identifiable intangible assets Investment in SSC fainal > 23 40 25 0 20 10 0 0x 0 0✔ 145 X 0✔ 0x 30✔

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Exercise 1-19 (Static) Computation of Fair Value LO 1-5 Prant Company acquired all of Sedford Corporation's assets and liabilities on January 1, 20X2, in a business combination. At that date, Sedford reported assets with a book value of $624,000 and liabilities of $356,000. Prant noted that Sedford had $40,000 of capitalized research and development costs on its books at the acquisition date that did not appear to be of value. Prant also determined that patents developed by Sedford had a fair value of $120,000 but had not been recorded by Sedford. Except for buildings and equipment, Prant determined the fair value of all other assets and liabilities reported by Sedford approximated the recorded amounts. In recording the transfer of assets and liabilities to its books, Prant recorded goodwill of $93,000. Prant paid $517,000 to acquire Sedford's assets and liabilities. If the book value of Sedford's buildings and equipment was $341,000 at the date of acquisition, what was their fair…
ACME Co. paid $110,000 for the net assets of Comb Corp. At the time of the acquisition the following information was available related to Comb's balance sheet: Book Value Fair Value Current Assets $50,000 $ 50,000 Building 80,000 100,000 Equipment 40,000 50,000 Liabilities 30,000 30,000 What is the amount recorded by ACME for the Building? a. $110,000 b. $20,000 c. $80,000 d. $100,000
(1) Goodwill Calculation: Goodwill is the excess of the purchase consideration transferred over the fair value of the identifiable net assets acquired. Goodwill = Purchase Consideration - Fair Value of Identifiable Net Assets Purchase Consideration = Fair value of Black's investment + Fair value of non- controlling interest Purchase Consideration (21,000,000 + 21,000) + 11,800,000 Identifiable Net Assets = (40,000 + 3,890 +6,280 +2,570) (2,480 + 10,000) Goodwill (21,021,000) + 11,800,000-(52,740) Goodwill = 32,768, 260-52,740 Goodwill = 32,715, 520 Explanation: Goodwill arising on the acquisition of white is RM 32, 715,520 Can you do it in a debit credit format?
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ACME Co. paid $110,000 for the net assets of Comb Corp. At the time of the acquisition the following information was available related to Comb's balance sheet: Book Value Fair Value Current Assets $50,000 $ 50,000 Building 80,000 100,000 Equipment 40,000 50,000 Liabilities 30,000 30,000 What is the amount recorded by ACME for the Building? a. $110,000 b. $20,000 c. $80,000 d. $100,000
From page 7-1 of the VLN, acquisition cost would NOT include: A. Purchase price. B. Transportation cost to get the asset ready to be used. C. Sales taxes. D. Cost incurred to operate the asset.
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Measuring and recording goodwill Princeton has acquired several other companies. Assume that Princeton purchased Kelleher for $9,000,000 cash. The book value of Kelleher’s assets is $19,000,000 (market value, $20,000,000), and it has liabilities of $12,000,000 (market value, $12,000,000). Requirements Compute the cost of the good-will purchased by Princeton. Record the purchase of Kelleher by Princeton.