Elizabeth Pie Company has been in business for 50 years and has developed a large group of loyal restaurant customers. Giant Bakery Inc. has made an offer to buy Elizabeth Pie Company for $5,800,000. The book value of Elizabeth Pie's recorded assets and liabilities on the date of the offer is $4,700,000 with a fair value of $5,300,000. Elizabeth Pie also (1) holds a patent for a pie crust fluting machine that the company invented (the patent with a fair value of $340,000 was never recorded by Elizabeth Pie because it was developed internally) and (2) estimates goodwill from loyal customers to be $278,000 (also never recorded by the company). If Elizabeth Pie Company management accepts Giant Bakery's offer of $5,800,000, compute the amount of goodwill that Giant Bakery should record on the date of the purchase. Goodwill

Elizabeth Pie Company has been in business for 50 years and has developed a large group of loyal restaurant customers. Giant Bakery Inc. has made an offer to buy Elizabeth Pie Company for $5,800,000. The book value of Elizabeth Pie's recorded assets and liabilities on the date of the offer is $4,700,000 with a fair value of $5,300,000. Elizabeth Pie also (1) holds a patent for a pie crust fluting machine that the company invented (the patent with a fair value of $340,000 was never recorded by Elizabeth Pie because it was developed internally) and (2) estimates goodwill from loyal customers to be $278,000 (also never recorded by the company). If Elizabeth Pie Company management accepts Giant Bakery's offer of $5,800,000, compute the amount of goodwill that Giant Bakery should record on the date of the purchase. Goodwill

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Taste-T Company has been in business for 30 years and has developed a large group of loyal restaurant customers. Down Home Foods made an offer to buy Taste-T Company for $6,000,000. Themarket value of Taste-T’s tangible assets, net of liabilities, on the date of the offer is $5,600,000.Taste-T also holds a patent for a fluting machine that the company invented (the patent with a market value of $200,000 was never recorded by Taste-T because it was developed internally). Howmuch has Down Home Foods included for intangibles in its offer of $6,000,000? Assuming TasteT accepts this offer, which company will report Goodwill on its balance sheet and at what amount?
Elizabeth Pie Company has been in business for 50 years and has developed a large group of loyal restaurant customers. Giant Bakery Inc. has made an offer to buy Elizabeth Pie Company for $4,200,000. The book value of Elizabeth Pie's recorded assets and liabilities on the date of the offer is $3,300,000 with a fair value of $3,600,000. Elizabeth Pie also (1) holds a patent for a pie crust fluting machine that the company invented (the patent with a fair value of $365,000 was never recorded by Elizabeth Pie because it was developed internally) and (2) estimates goodwill from loyal customers to be $340,000 (also never recorded by the company). If Elizabeth Pie Company management accepts Giant Bakery's offer of $4,200,000, compute the amount of goodwill that Giant Bakery should record on the date of the purchase. Goodwill
Meyer & Smith is a full-service technology company. They provide equipment, installation services as well as training. Customers can purchase any product or service separately or as a bundled package. Sunland Corporation purchased computer equipment, installation and training for a total cost of $ 135405 on March 15, 2021. Estimated standalone fair values of the equipment, installation and training are $ 88500, $ 44400 and $ 26400 respectively. The journal entry to record the transaction on March 15, 2021 will include a O credit to Sales Revenue for $ 135405. O credit to Unearned Service Revenue of $ 22440. O debit to Unearned Service Revenue of $ 26400. O credit to Service Revenue of $ 44400.
The following information relates to Question 2 and 3: On July 1, 2018, Gene Parmesan's Genes Company paid $16,500,000 cash and signed a $7,500,000 note payable (due in 3 months) to acquire in-process R&D from another company. They are planning to use the assets acquired for research and development in their GMB (Genetically Modified Broccoli) division. The assets can be used for other research and development projects as well. They plan to use the assets purchased for 10 years and believe they can sell them for $1,500,000 at the end of those 10 years. From July 1 through Dec. 31, 2018, Genes Co. spends $6,000,000 (palid in cash) on scientist salaries and broccoll plants to use in the purchased R&D project. Genes Co. also amortizes any capitalized assets on a straight-line basis. REQUIRED: Write the journal entry related to the acquisition that Genes Co. should record on July 1.2018.
Elizabeth Pie Company has been in business for 50 years and has developed a large group of loyal restaurant customers. Giant Bakery Inc. has made an offer to buy Elizabeth Pie Company for $5,000,000. The book value of Elizabeth Pie's recorded assets and liabilities on the date of the offer is $4,300,000 with a fair value of $4,500,000. Elizabeth Pie also (1) holds a patent for a pie crust fluting machine that the company invented (the patent with a fair value of $300,000 was never recorded by Elizabeth Pie because it was developed internally) and (2) estimates goodwill from loyal customers to be $310,000 (also never recorded by the company). If Elizabeth Pie Company management accepts Giant Bakery's offer of $5,000,000, compute the amount of goodwill that Giant Bakery should record on the date of the purchase. Goodwill
During its inception, Devon Company purchased land for $250,000 and a building for $200,000. After exactly 3 years, it transferred these assets and cash of $50,000 to a newly created subsidiary, Regan Company, in exchange for 20,000 shares of Regan's $10 par value stock. Devon uses straight-line depreciation. Useful life for the building is 20 years, with zero residual value. An appraisal revealed that the building has a fair value of $250,000. What will Devon record as Additional Paid in Capital as a result of this transaction? Group of answer choices additional paid-in capital of $0. additional paid-in capital of $270,000. additional paid-in capital of $350,000. additional paid-in capital of $300,000.
Blackford and Medford Publishing Company own the copyrights on many top authors. On January 5, 2020, Blackford and Medford acquired the copyright on the literary works of Susan Monroe, an underground novelist in the 1960s, for $825,000 cash. Due to a recent resurgence of interest in the 1960s, the copyright has an estimated economic life of 5 years. The residual value is estimated to be zero. Required: 1. Prepare a journal entry to record the acquisition of the copyright. 2. Compute and record the 2020 amortization expense for the copyright.
Below are transactions related to Martinez Company. The City of Pebble Beach gives the company 5 acres of land as a plant site. The fair value of this land is determined to be $87,350. (a) 13,000 shares of common stock with a par value of $55 per share are issued in exchange for land and buildings. The property has been appraised at a fair value of $873,500, of which $175,190 has been allocated to land and $698,310 to buildings. The stock of Martinez Company is not listed on any exchange, but a block of 100 shares was sold by a stockholder 12 months ago at $71 per share, and a block of 200 shares was sold by another stockholder 18 months ago at $63 per share. (b) (c) No entry has been made to remove from the accounts for Materials, Direct Labor, and Overhead the amounts properly chargeable to plant asset accounts for machinery constructed during the year. The following information is given relative to costs of the machinery constructed. Materials used $11,300 Factory supplies used 846…
Joy's House of Cheese (stocks Cougar Cheese) purchases a tract of land and an existing building for $940,000. The company plans to remove the old building and construct a new building on the site in a few months. In addition to the purchase price, Joy's pays closing costs, including title insurance of $2,400. The company also pays $12,800 in property taxes, which includes $8,400 of back taxes (unpaid taxes from previous years) paid by Joy's on behalf of the seller and $4,400 due for the current fiscal year after the purchase date. Shortly after closing, the company pays a contractor $47,000 to tear down the old building and remove it from the site. Joy is able to sell salvaged materials from the old building for $3,800 and pays an additional $10,400 to level the land to make it ready for use. Required: Determine the amount Joy's should record as the cost of the land. (Amounts to be deducted should be indicated by a minus sign.) Total cost of the land $
Dontelli Enterprises began operations on July 1, 2012, as a manufacturer of heat sensitive valves used in the plumbing industry. Effective at the beginning of 2014, Platco, an American company, acquired an 80% interest in Dontelli paying 400,000 FC. Of the purchase price in excess of book value, 42,000 FC was allocated to patents having a remaining useful life of 10 years and the balance was allocated to goodwill. It has been determined that the functional currency is the FC.Dontelli’s condensed trial balances, expressed in FC, at selected rates are as follows:(attached)Additional equipment was purchased on April 1, 2015. Dividends were paid on June 30 of 2014 and 2015. At the end of 2015, goodwill traceable to the acquisition of Dontelli was tested for impairment, and accordingly, the goodwill was written down by 20%. Calculate the balance of the cumulative translation adjustment as of year-end 2014 and 2015. Given the consolidated income statement for years 2014 and 2015, determine…