Big Company purchased Small Company for $1,450,000. Small Company had assets with a fair value of $1,150,000, and liabilities with a fair value of $200,000. Use this information to determine the dollar value of goodwill.
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- Naughty Company assembles the following data relative to a certain entity in determining the amount to be paid for net assets and goodwill: Assets at fair value before goodwill 2, 600, 000Liabilities 900, 000Shareholders’ equity 1, 700, 000 Net earnings after elimination of unusual or infrequent items:2008 200, 0002009 230, 0002010 300, 0002011 250, 0002012 270, 000 Required:Calculate the amount of goodwill under the following:1. Average earnings are capitalized at 10%2. A return of 8% is considered normal on net assets at fair value. Excess earnings are capitalized at 15%.3. A return of 10% is considered normal on net assets at fair value. Goodwill is measured at 5 years excess earnings.4. A return of 10% is considered normal on net assets at fair value. Excess earnings are expected to…Topic: Intangible Assets (Goodwill) England Company assembled the following data relative to a certain entity in determining the amount to be paid for net assets and goodwill: Assets at fair value before goodwill 2,600,000 Liabilities 900,000 Shareholders' Equity 1,700,000 Net Earnings after elimination of unusual or infrequent items: 2017 200,000 2018 230,000 2019 300,000 2020 250,000 2021 270,000 Required: Calculate the amount of goodwill under the following: 1. Average earnings are capitalized at 10%. 2. A return of 8% is considered normal on net assets at fair value. Excess earnings are capitalized at 15%. 3. A return of 10% is considered normal on net assets at fair value. Goodwill is measured at 5 years excess earnings. 4. A return of 10% is considered…Calculate the total goodwill for a pro forma balance sheet given the following details. Details: Equity purchase price: $2,000 Book value: $1,700 Existing goodwill: $100 A. $100 B. $300 C. $200 D. $400
- Big Company purchased Small Company for $1,450,000.Small Company had assets with a fair value of $1,150,000, and liabilities with a fair value of $200,000. Use this information to determine the dollar value ofgoodwill.Compute the amount of acquired Goodwill, including contingent earnings and bargain purchase Assume that you are charged with assigning fair values related to a $3,800,000 acquisition. You determine that the fair value of the net identifiable tangible assets is $1,850,000. You also conclude that the purchase included a Customer List with a fair value at $340,000. a. How much Goodwill will you record in this acquisition? $ 1,610,000 ✓ b. Continuing from part (a), now also assume that the purchase and sale agreement requires the payment of an additional $925,000 if the subsidiary achieves a certain level of earnings. You estimate the fair value of that contingent earnings clause in the agreement to be $220,000. How does this additional information affect your computation of Goodwill? The amount of Goodwill recorded is $ 1,830,000 c. This part of the exercise is independent parts (a) and (b). Assume that the purchase price is $3,800,000 and that fair value of the net identifiable tangible…Java Dreams shows assets of $86,400 and liabilities of $15,000. The fair value of the assets is $90,000 and the fair value of its liabilities is $15,000. One Mean Bean paid Java Dreams $95,000 to acquire all of its assets and liabilities. One Mean Bean should record goodwill on this purchase as: $20,000 $3,600 $5,000 $23,600
