If you give me wrong answer this accounting question I will give you unhelpful rate ABC buys a smaller company XYZ for a negotiated priceof 1 million. XYZ's assets are valued at 750,000 pounds.Assuming goodwill is amortized over 5 years, what isthe value of goodwill in ABC's Statement of FinancialPosition at the end of the third year after acquisition?

Step 1: Define Intangible AssetsThe intangible assets are those assets that do not have any physical…

Answered: ABC buys a smaller company XYZ for a…

Principles of Accounting Volume 1

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Chapter11: Long-term Assets

Section: Chapter Questions

Problem 10PA: Buchanan Imports purchased McLaren Corporation for $5,000,000 cash when McLaren had net assets worth...

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The owners of Rainier Company are planning to sell the business to new interests. The cumulative net earnings for the past five years amounted to P16,500,000 including expropriation loss of P1,500,000. Goodwill is measured by capitalizing excess earnings at 25% with normal earnings at 20%. The fair value of the net assets of the entity at current year-end was P10,000,000. What is the acquisition cost of the entity? A. 16,400,000 B. 14,000,000 C. 14,400,000 D. 15,200,000
Star Company expects to sell Division S next year. Division S meets the criteria to be a component unit of Star Company. At the end of this year, Star Company estimates the fair value of Division S at $320,000, and the net book value of Division S is $280,000. Based on the information, what is Star Company's pretax gain (loss) on the held-for-sale component? a. $320,000 gain b. $40,000 gain c. $40,000 loss d. $320,000 loss
Buchanan Imports purchased McLaren Corporation for $5,000,000 cash when McLaren had net assets worth $4,500,000. A. What is the amount of goodwill in this transaction? B. What is Buchanans journal entry to record the purchase of McLaren? C. What journal entry should Buchanan write when the company internally generates additional goodwill in the year following the purchase of McLaren?
Company A acquires Company B for an Equity Purchase Price of $500, and it issues $250 of Common Stock and $250 of Debt to fund this deal. Company B’s Assets (all of which are “operational”) are worth $350, and it has no Liabilities. Of the purchase premium, $100 is allocated to Goodwill, and $50 is allocated to Other Intangible Assets.In the first year following the deal, Company A generates a total of $100 in Net Income, and it issues $50 in Common Dividends to its Common Shareholders and $50 in Preferred Dividends to its Preferred Stockholders.How do Company A’s Current Equity Value and Current Enterprise Value change from beginning to end?a. Current Equity Value is up by $250, and Current Enterprise Value is up by $500.b. Current Equity Value is up by $300, and Current Enterprise Value is up by $500.c. Current Equity Value is up by $500, and Current Enterprise Value is up by $350.d. Current Equity Value is up by $250, and Current Enterprise Value is up by $350.
Adams, Incorporated, acquires Clay Corporation on January 1, 2023, in exchange for $527,000 cash. Immediately after the acquisition, the two companies have the following account balances. Clay’s equipment (with a five-year remaining life) is actually worth $448,800. Credit balances are indicated by parentheses. Items Adams Clay Current assets $ 394,000 $ 267,000 Investment in Clay 527,000 0 Equipment 630,800 396,000 Liabilities (286,000) (199,000) Common stock (350,000) (150,000) Retained earnings, 1/1/23 (915,800) (314,000) In 2023, Clay earns a net income of $54,300 and declares and pays a $5,000 cash dividend. In 2023, Adams reports net income from its own operations (exclusive of any income from Clay) of $172,000 and declares no dividends. At the end of 2024, selected account balances for the two companies are as follows: Items Adams Clay Revenues $ (460,000) $ (270,000) Expenses 333,500 202,500 Investment income Not given 0 Retained earnings,…
ABC Corp. acquired 40% of DEF Corp. by spending Rp1.000.000 cash on January 1, 2020. Book value of DEF’s net assets at acquisition date was Rp1.500.000; Inventories were undervalued for Rp100.000 and note payable was overvalued for Rp200.000. All inventories are sold in 2020 and note payable will be due at the end of 2023. At the end of 2020, DEF announced net loss Rp250.000. The ending balance of “Investment in DEF” account at the end of 2020 will be:
Meck Company is considering the acquisition of another entity. The following data relate to the acquiree: Shareholders' equity 5,000,000 Earnings for prior three years 1,500,000 The acquiree has a valuable patent which is not recorded. If the entity is sold, the patent would be transferred to the buyer for P500,000. Other assets are properly appraised. The patent has a remaining life of 5 years. The earnings of the entity are expected to increase 10% more than the average earnings of the past three years before taking into consideration the amortization of the patent cost. Compute for the goodwill under the following methods: 1. Average future earnings are capitalized at 8% 2. goodwill is measured at the average excess earnings capitalized at 10% with normal rate at 8%. 3. Goodwill is measured at the present value of the average excess earnings discounted at 10% for four years with normal rate of 8%. The present value of an ordinary annuity of 1 for 4 years at 10% is 3.17.
Adams, Incorporated, acquires Clay Corporation on January 1, 2023, in exchange for $550,400 cash. Immediately after the acquisition, the two companies have the following account balances. Clay’s equipment (with a five-year remaining life) is actually worth $537,600. Credit balances are indicated by parentheses. Items Adams Clay Current assets $ 480,000 $ 236,000 Investment in Clay 550,400 0 Equipment 713,600 462,000 Liabilities (261,000) (232,000) Common stock (350,000) (150,000) Retained earnings, 1/1/23 (1,133,000) (316,000) In 2023, Clay earns a net income of $50,400 and declares and pays a $5,000 cash dividend. In 2023, Adams reports net income from its own operations (exclusive of any income from Clay) of $201,000 and declares no dividends. At the end of 2024, selected account balances for the two companies are as follows: Items Adams Clay Revenues $ (508,000) $ (360,000) Expenses 368,300 270,000 Investment income Not given 0 Retained earnings,…
Adams, Incorporated, acquires Clay Corporation on January 1, 2023, in exchange for $550,400 cash. Immediately after the acquisition, the two companies have the following account balances. Clay’s equipment (with a five-year remaining life) is actually worth $537,600. Credit balances are indicated by parentheses. Items Adams Clay Current assets $ 480,000 $ 236,000 Investment in Clay 550,400 0 Equipment 713,600 462,000 Liabilities (261,000) (232,000) Common stock (350,000) (150,000) Retained earnings, 1/1/23 (1,133,000) (316,000) In 2023, Clay earns a net income of $50,400 and declares and pays a $5,000 cash dividend. In 2023, Adams reports net income from its own operations (exclusive of any income from Clay) of $201,000 and declares no dividends. At the end of 2024, selected account balances for the two companies are as follows: Items Adams Clay Revenues $ (508,000) $ (360,000) Expenses 368,300 270,000 Investment income Not given 0 Retained earnings,…
On January 1, 2020, Ivanhoe Company makes the two following acquisitions. 1. Purchases land having a fair value of $ 150,000 by issuing a 5-year, zero-interest-bearing promissory note in the face amount of $ 252,759. 2. Purchases equipment by issuing a 6%, 9-year promissory note having a maturity value of $ 180,000 (interest payable annually). The company has to pay 11% interest for funds from its bank. (a) Record the two journal entries that should be recorded by Ivanhoe Company for the two purchases on January 1, 2020. (b) Record the interest at the end of the first year on both notes using the effective-interest method. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
On January 1, 2020, Hand acquires 40% ownership of Foot. At the acquisition date, Foot had equipment with a book value of $100,000 and a fair value of $160,000. The remaining useful life is 4 years. What is the amount of amortization (debit to equity earnings) that will be recognized in 2020?

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ABC buys a smaller company XYZ for a negotiated price of 1 million. XYZ's assets are valued at 750,000 pounds. Assuming goodwill is amortized over 5 years, what is the value of goodwill in ABC's Statement of Financial Position at the end of the third year after acquisition?