(Exercise 5.3) The condensed balance sheet of Geo Company on March 31, 2005, is shown below: CHECK FIGURE Amount of goodwill, $10,000. Cash Other current assets Plant assets (net) Total assets GEO COMPANY Balance Sheet (prior to business combination) March 31, 2005 Assets $ 20,000 140,000 740,000 $900,000 Liabilities and Stockholders' Equity $ 80,000 200,000 180,000 120,000 320,000 $900,000 Current liabilities Long-term debt Common stock, $2 par Additional paid-in capital Retained earnings Total liabilities and stockholders' equity On March 31, 2005, Master Corporation paid $700,000 cash for all the net assets of Geo (except cash) in a business combination. The carrying amounts of Geo's other current as- sets and current liabilities were the same as their current fair values. However, current fair values of Geo's plant assets and long-term debt were $920,000 and $190,000, respectively. Also on March 31, Master paid the following direct out-of-pocket costs for the business combination with Geo: Legal fees Finder's fee CPA firm's fee for audit of Geo Company's March 31, 2005, financial statements Total out-of-pocket costs of business combination $ 10,000 70,000 20,000 $100,000 Prepare a working paper to compute the amount of goodwill or bargain-purchase excess in the business combination of Master Corporation and Geo Company on March 31, 2005. (Disregard income taxes.)
(Exercise 5.3) The condensed balance sheet of Geo Company on March 31, 2005, is shown below: CHECK FIGURE Amount of goodwill, $10,000. Cash Other current assets Plant assets (net) Total assets GEO COMPANY Balance Sheet (prior to business combination) March 31, 2005 Assets $ 20,000 140,000 740,000 $900,000 Liabilities and Stockholders' Equity $ 80,000 200,000 180,000 120,000 320,000 $900,000 Current liabilities Long-term debt Common stock, $2 par Additional paid-in capital Retained earnings Total liabilities and stockholders' equity On March 31, 2005, Master Corporation paid $700,000 cash for all the net assets of Geo (except cash) in a business combination. The carrying amounts of Geo's other current as- sets and current liabilities were the same as their current fair values. However, current fair values of Geo's plant assets and long-term debt were $920,000 and $190,000, respectively. Also on March 31, Master paid the following direct out-of-pocket costs for the business combination with Geo: Legal fees Finder's fee CPA firm's fee for audit of Geo Company's March 31, 2005, financial statements Total out-of-pocket costs of business combination $ 10,000 70,000 20,000 $100,000 Prepare a working paper to compute the amount of goodwill or bargain-purchase excess in the business combination of Master Corporation and Geo Company on March 31, 2005. (Disregard income taxes.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:(Exercise 5.3) The condensed balance sheet of Geo Company on March 31, 2005, is shown below:
CHECK FIGURE
Amount of goodwill,
$10,000.
Cash
Other current assets
Plant assets (net)
Total assets
GEO COMPANY
Balance Sheet (prior to business combination)
March 31, 2005
Assets
$ 20,000
140,000
740,000
$900,000
Liabilities and Stockholders' Equity
$ 80,000
200,000
180,000
120,000
320,000
$900,000
Current liabilities
Long-term debt
Common stock, $2 par
Additional paid-in capital
Retained earnings
Total liabilities and stockholders' equity
On March 31, 2005, Master Corporation paid $700,000 cash for all the net assets of Geo
(except cash) in a business combination. The carrying amounts of Geo's other current as-
sets and current liabilities were the same as their current fair values. However, current fair
values of Geo's plant assets and long-term debt were $920,000 and $190,000, respectively.
Also on March 31, Master paid the following direct out-of-pocket costs for the business
combination with Geo:
Legal fees
Finder's fee
CPA firm's fee for audit of Geo Company's March 31, 2005, financial
statements
Total out-of-pocket costs of business combination
$ 10,000
70,000
20,000
$100,000
Prepare a working paper to compute the amount of goodwill or bargain-purchase excess
in the business combination of Master Corporation and Geo Company on March 31, 2005.
(Disregard income taxes.)
AI-Generated Solution
AI-generated content may present inaccurate or offensive content that does not represent bartleby’s views.
Unlock instant AI solutions
Tap the button
to generate a solution
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education