GOODWILL Problem #1: Determining Goodwill Slam Corp. purchased Dot.com Corp for $190,000 in an all cash deal. Book and fair value information for Dot.com are as follows: At Acquisition Book Fair Value Value 1/2/2011 1/2/2011 Assets Current 40,000 60,000 50,000 50,000 50,000 Equipment Patent Goodwill 100,000 150,000 Liabilities 70,000 60,000 Equity 30,000 100,000 Required: Determine goodwill valuation on the acquisition date, if any.
GOODWILL Problem #1: Determining Goodwill Slam Corp. purchased Dot.com Corp for $190,000 in an all cash deal. Book and fair value information for Dot.com are as follows: At Acquisition Book Fair Value Value 1/2/2011 1/2/2011 Assets Current 40,000 60,000 50,000 50,000 50,000 Equipment Patent Goodwill 100,000 150,000 Liabilities 70,000 60,000 Equity 30,000 100,000 Required: Determine goodwill valuation on the acquisition date, if any.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Need some assistance in completing Problem 1 and Problem 2. Thank you
Transcribed Image Text:**GOODWILL**
**Problem #1: Determining Goodwill**
Slam Corp. purchased Dot.com Corp for $190,000 in an all-cash deal. Book and fair value information for Dot.com are as follows:
**At Acquisition**
| | Book Value (1/2/2011) | Fair Value (1/2/2011) |
|------------------|-----------------------|-----------------------|
| **Assets** | | |
| Current | 40,000 | 50,000 |
| Equipment | 60,000 | 50,000 |
| Patent | - | 50,000 |
| | | |
| **Total Assets** | 100,000 | 150,000 |
| | | |
| **Liabilities** | 70,000 | 60,000 |
| | | |
| **Equity** | 30,000 | |
| | 100,000 | |
**Required:** Determine goodwill valuation on the acquisition date, if any.
---
**Problem #2: Impairment of Goodwill**
On 12/31/2021, the fair value of Dot.com Corp.’s net assets was $150,000. Detailed book value and fair value information is as follows:
| | Book Value (12/31/2021) | Fair Value (12/31/2021) |
|------------------|-------------------------|-------------------------|
| **Assets** | | |
| Current | 70,000 | 70,000 |
| Equipment | 48,000 | 45,000 |
| Patent | 42,000 | 50,000 |
| Goodwill | 100,000 | |
| | | |
| **Total Assets** | 260,000 | |
| | | |
| **Liabilities** | 70,000 | 70,000 |
| | | |
| **Equity** | 190,000 | |
| | 260,000 | |
**Required:** Determine the impairment of goodwill for Dot.com Corp as of 12/31/21, if any.
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