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a. What is the total consideration given by Promise? (Show your calculations.) b. What values for each of the acquired assets and liabilities will be used in the consolidation?

a. What is the total consideration given by Promise? (Show your calculations.) b. What values for each of the acquired assets and liabilities will be used in the consolidation?

FINANCIAL ACCOUNTING
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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shares on January 1. Promise paid $300,000 and issued $200,000 in long-term liabilities and paid Promise also agreed to pay $80,000 to the former owners of SaidSo contingent on meeting certain revenue goals during the following year. Promise estimated the present value of its probability adjusted expected payment for the contingency or contingent obligation at $30,000 in legal fees. $23,000 Precombination book values for SaidSo, Inc. are as follows: 80,000 90,000 175,000 Current assets 24 Equipment Buildings Goodwill 33,000 $378,000 Total $ (45,000) (180,000) (115,000) (138,000) 100,000 $(378,000) Current liabilities 2$ Common stock Retained earnings Revenues Expenses Total Promise's appraisal of SaidSo found two balance sheet accounts that differed from fair value. Equipment was undervalued by $15,000 and Buildings by $5,000. Promise noted that SaidSo has unrecorded client contracts worth $60,000 and résearch and development activity in process with an appraised fair value of $90,000
Transcribed Image Text:shares on January 1. Promise paid $300,000 and issued $200,000 in long-term liabilities and paid Promise also agreed to pay $80,000 to the former owners of SaidSo contingent on meeting certain revenue goals during the following year. Promise estimated the present value of its probability adjusted expected payment for the contingency or contingent obligation at $30,000 in legal fees. $23,000 Precombination book values for SaidSo, Inc. are as follows: 80,000 90,000 175,000 Current assets 24 Equipment Buildings Goodwill 33,000 $378,000 Total $ (45,000) (180,000) (115,000) (138,000) 100,000 $(378,000) Current liabilities 2$ Common stock Retained earnings Revenues Expenses Total Promise's appraisal of SaidSo found two balance sheet accounts that differed from fair value. Equipment was undervalued by $15,000 and Buildings by $5,000. Promise noted that SaidSo has unrecorded client contracts worth $60,000 and résearch and development activity in process with an appraised fair value of $90,000
a. What is the total consideration given by Promise? (Show your calculations.) b. What values for each of the acquired assets and liabilities will be used in the consolidation?
Transcribed Image Text:a. What is the total consideration given by Promise? (Show your calculations.) b. What values for each of the acquired assets and liabilities will be used in the consolidation?
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