Answered: goodwill

Business

Accounting

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

Related questions

Q: On January 1, 2019, XYZ Co. issued equity instruments in exchange for 75% interest in ABC Co. On…

A: The question is based on the concept of Consolidated Financial Statements. As per the Bartleby…

Q: On September 17, 2024, Ziltech, Incorporated, entered into an agreement to sell one of its divisions…

A: Explanation:Introduction to Long term assets:-Long term assets which the company plans to dispose in…

Q: 1) Shrimp Boat Company decides to consolidate its operations with Trawlers, Inc., to form Unique…

Q: Pratt Company acquired all of the outstanding shares of Spider, Inc., on December 31, 2021, for…

A: Here's the consolidated balance sheet for Pratt and Spider as of December 31, 2021:Explanation:…

Q: XYZ Co had the following accounts at the time it was acquired by ABC Inc (see image below). ABC paid…

A: Cost of acquisition is the cost at which one business firm or any individual acquires another…

Q: Prairie Corporation is a primary beneficiary for Vintage Company, a variable interest entity. When…

A: Net income: The bottom line of income statement which is the result of excess of earnings from…

Q: Use the following to answer questions 8 through 10: On May 1, 2021, Jazzie Co. agreed to sell the…

A: SOLUTION- WORKING NOTE- GAIN ON ASSET SALE = ($80 MILLION - $ 48 MILLION)…

Q: E Company Ltd, a reporting entity, purchases all the issued shares of D Company Pty Ltd for…

A: Journal Entry: Journal entry is the act of keeping records of transactions in an accounting journal.…

Q: Practical Corporation acquired all of the common stock of Simple Company for $450,000 on January 1,…

A: Goodwill refers to an intangible asset that is recorded in the balance sheet. Goodwill is reported…

Q: 2. M Company and B Incorporation formed MB Ltd., a joint venture, on January 1, 2021. M Co. invested…

A: Journal Entries:- Journal entries are the basic pieces of information that help answer important…

Q: On January 1, 20x1, Entity A acquires all the assets and liabilities of Entity B for P2,000,000.…

A: Working Note #1 Computation of consideration transferred: Consideration transferred=P2,000,000 -Off…

Q: Which statement most accurately describes the law in relation to Small Business Entity (SBE)…

A: Small businesses could get access to range of concessions involving the payment as well as reporting…

Q: On January 1, 20X5, Pirate Company acquired all of the outstanding stock of Ship Incorporated, a…

A: A journal entry is a form of accounting entry that is used to report a business transaction in a…

Q: ABC and XYZ enter into a contract to set up a separate vehicle (entity 123) for the purpose of…

A: Introduction: The amount generated by an individual or company after deducting costs, allowances,…

Q: In the year ended June 30 2021, Lorelai Ltd, a reporting entity, acquired the assets and assumed the…

A: When a company's ownership is acquired by another company, is is said to be an acquisition. When 2…

Q: On January 7, 2022, Martin Corporation acquires two properties from a shareholder solely in exchange…

A: The "basis" of an asset is what a person has paid for an asset together with money invested in an…

Q: zeke Ltd. (Zeke) contributed a patent to VE Company (VE) on January 1, 2023. VE is a business and is…

A: Patents are usually granted for inventions or technological advances that are new, useful, and…

Q: riod, Venus sold to Highlands a noncurrent asset for P 1,000. The asset's original cost was P 2,500…

A: Non-controlling interest: Non-controlling interest can be defined as the position of the minority…

Q: On September 17, 2024, Ziltech, Incorporated, entered into an agreement to sell one of its divisions…

A: Long term assets which the company plans to dispose in future are known as held for sale.Such assets…

Q: Sunshine NFP, a not-for-profit entity, gains control over Dancing Bears NFP, another not-for-profit.…

A: Intangible Assets: These are the long-term assets having no physical existence. However, the…

Question

100%

AAA Co. and BBB, Inc. both engage in the same business. On January 1, 20x1, AAA and BBB signed a contract, the terms of which resulted in AAA obtaining control over BBB without any transfer of consideration between the parties.
The fair value of the identifiable net assets of BBB, Inc. on January 1, 20x1 is ₱2,000,000. BBB chose to measure non-controlling interest at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets.
Requirement: Compute for the goodwill.

Definition Definition Intangible asset that includes proprietary or intellectual property and brand value of a firm. Goodwill is recorded in the books when a firm purchases another firm and the purchase price is more than the fair value of net identifiable assets of the acquired business. The amount of goodwill is recorded on the asset side of the balance sheet (statement of financial position).

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Recognition criteria of goodwill

VIEW

Facts of the case

VIEW

Answer

VIEW

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Similar questions

2.On Feb, 1, Johnson Co. agreed to sell the assets of its Formal Wear Division to Sun Hat Inc. The following additional facts pertain to the transaction: The Formal Wear Division qualifies as a component of the entity according to GAAP regarding discontinued operations. The book value of Formal Wear's assets totaled $48 million on December 31, 2021. Formal Wear's operating income was a pre-tax loss of $10 million in 2021. Tango's income tax rate is 25%. Suppose that the Formal Wear Division's assets had not been sold by December 31, 2021, but were considered held for sale. Assume that the fair value of these assets was $40 million at December 31, 2021. In the income statement for the year ended December 31, 2021, Tango Co. would report discontinued operations of: A) $7.5 million loss. B) $10.0 million loss. C) $18 million loss. D) $13.5 million loss. .
On September 17, 2024, Ziltech, Incorporated, entered into an agreement to sell one of its divisions that qualifies as a component of the entity according to generally accepted accounting principles. By December 31, 2024, the company's fiscal year - end, the division had not yet been sold, but was considered held for sale. The net fair value (fair value minus costs to sell) of the division's assets at the end of the year was $10 million. The pretax income from operations of the division during 2024 was $2 million. Pretax income from continuing operations for the year totaled $ 13 million. The income tax rate is 25 %. Ziltech reported net income for the year of $5.1 million. Required: Determine the book value of the division's assets on December 31, 2024.
X, Inc. is negotiating with Y, Inc. to acquire 100% of X, Inc.'s share capital. X, Inc. is currently owned by Y, Inc. and meets the definition of business defined in IFRS 3. The sale of shares is subject to approval by X, Inc.'s shareholders and the government. Because the agreement takes time, prior to the sale of shares, X, Inc and Y, Inc entered into an agreement that: Both parties settle it legally with the consent of the necessary agreements; Determine the purchase price; Determined that the following decisions and actions may be taken by Y, Inc. only with X, Inc's approval until the sale of shares, through: o Changes in the management of Z, Inc; o Dividend payment; and, o New project contracts that exceed IDR 200 billion. Does X, Inc control Z, Inc as a result of this agreement?
On January 1, 2018 Casey Corporation exchanged $3,210,000 cash for 100 percent of the outstanding voting stock of Kennedy Corporation. Casey plans to maintain Kennedy as a wholly owned subsidiary with separate legal status and accounting information systems. At the acquisition date, Casey prepared the following fair-value allocation schedule: Fair value of Kennedy (consideration transferred) Carrying amount acquired Excess fair value to buildings (undervalued) to licensing agreements (overvalued) to goodwill (indefinite life) Accounts Cash Accounts receivable Inventory Investment in Kennedy Buildings (net) Licensing agreements Goodwill Total assets Accounts payable Long-term debt Common stock Immediately after closing the transaction, Casey and Kennedy prepared the following postacquisition balance sheets from their separate financial records. Additional paid-in capital Retained earnings Total liabilities and equities $ Casey 480,000 1,420,000 1,490,000 3,210,000 5,992,500 0 $ 393,000…
PT X is negotiating with PT Y to acquire 100% share capital of PT Z. PT Z is currently fully owned by PT Y and meets the business definition as defined in IFRS 3. Share sales must be approved by PT X shareholders and the government. Because the agreement takes time, before the time the share sale is completed, PT X and PT Y make an agreement that: • Both parties are committed to completing legally subject to the necessary agreements;• Determine the purchase price;• Determine that the following decisions and actions can be taken by PT Y only with PT X's approval until the sale of shares, through: o Changes in the management of PT Z; o Dividend payment; and, o New project contracts that exceed USD 200 billion. Does PT X control PT Z as a result of this agreement? Give references from the related IFRS.
ABC Co. and XYZ, Inc. both engage in the same business. On January 1, 2021, ABC and XYZ signed a contract, the terms of which resulted in ABC obtaining control over XYZ without any transfer of consideration between the parties. The fair value of the identifiable net assets of XYZ Inc. on January 1, 2021 is ₱4,000,000. XYZ chose to measure non-controlling interest at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets.How much is the goodwill?
Highpoint owns a 95 percent majority voting interest in Middlebury. In turn, Middlebury owns an 80 percent majority voting interest in Lowton. In the current year, each firm reports the following income and dividends. Separate Company income figures do not include any investment or dividend income.In addition, in computing its income on a full accrual basis, Middlebury's acquisition of Lowton necessitates excess acquisition-date fair value over book value amortizations of $25,000 per year. Similarly, Highpoint's acquisition of Middlebury requires $20,000 of excess fair-value amortizations. Required Prepare an Excel spreadsheet that computes the following: 1. Middlebury's net income including its equity in Lowton earnings. 2. Highpoint's net income including its equity in Middlebury's total earnings. 3. Total entity net income for the three companies. 4. Net income attributable to the noncontrolling interests. 5. Difference between these elements: • Highpoint's net income. • Total…