Iris Company purchased another entity for P8,000,000 cash. The assets and liabilities of the acquire are as follows: Carrying Amount Fair Value 1,000,000 500,000 Cash 1,000,000 400,000 Inventory In-process R&D 6,000,000 5,000,000 Assembled workforce 1,100,000 1,200,000 3,000,000 Liabilities 2,500,000 What is the goodwill arising from the acquisition? A. 4,500,000 В. 3,300,000 с. 3,100,000 D. 2,000,000

Iris Company purchased another entity for P8,000,000 cash. The assets and liabilities of the acquire are as follows: Carrying Amount Fair Value 1,000,000 500,000 Cash 1,000,000 400,000 Inventory In-process R&D 6,000,000 5,000,000 Assembled workforce 1,100,000 1,200,000 3,000,000 Liabilities 2,500,000 What is the goodwill arising from the acquisition? A. 4,500,000 В. 3,300,000 с. 3,100,000 D. 2,000,000

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

2-Assume that one of your clients asks for your assistance in allocating the $4,500,000 cost of a 100% acquisition of a competitor firm. You estimate the fair value of the net assets on the investee's balance sheet at $3,000,000. However, there is, in addition, an unrecorded trademark valued at $850,000. The intangible asset has an indefinite useful life. Required:a. What amount of goodwill will be recorded?b. What will be the effect of the goodwill and brand name on the annual income statement?c. Now assume that the agreement between the investor and investee calls for an additional payment of $500,000 contingent upon the investee reaching a certain level of income within three years. You estimate the fair value of the potential payment at $400,000. What effect, if any, does the potential payment have on the amount of goodwill recognized?
4. Giants Co paid $12,500,000 cash to acquire California Co. At the time of the acquisition, Giants Co and California Co had the following balance sheet information: Giants Co Balance Sheet at time of purchase "Book" value Current Assets $13,400,000 Long-Term Assets $28,700,000 Total Liabilities $17,600,000 California Co Balance Sheet at time of purchase Current Assets Long-Term Assets Total Liabilities ** REQUIRED: 1) Determine the following: a) amount of goodwill that Giants Co will record as a result of the aquisition. b) Long-term Assets Giants Co will have, immediately after the acquisition. c) Total Assets Giants Co will have, immediately after the acquisition. d) Total Liabilities Giants Co will have, immediately after the acquisition. Given the same information as above, assume that Giants Co pays $10,500,000 cash, instead of $12,500,000 cash, for California Co. 2) Determine the following: a) amount of goodwill that Giants Co will record as a result of the aquisition. b)…
ACME Co. paid $110,000 for the net assets of Comb Corp. At the time of the acquisition the following information was available related to Comb's balance sheet: Book Value Fair Value Current Assets $50,000 $ 50,000 Building 80,000 100,000 Equipment 40,000 50,000 Liabilities 30,000 30,000 What is the amount recorded by ACME for the Building? a. $110,000 b. $20,000 c. $80,000 d. $100,000
ACME Co. paid $110,000 for the net assets of Comb Corp. At the time of the acquisition the following information was available related to Comb's balance sheet: Book Value Fair Value Current Assets $50,000 $ 50,000 Building 80,000 100,000 Equipment 40,000 50,000 Liabilities 30,000 30,000 What is the amount recorded by ACME for the Building? a. $110,000 b. $20,000 c. $80,000 d. $100,000
Tesla acquired Amazon, for $33,520,000. The fair value of all Amazon's identifiable tangible and intangible assets was $30,000,000. Short will amortize any goodwill over the maximum number of years allowed. What is the annual amortization of goodwill for this acquisition? Multiple Choice O O $880,000 $1,760,000 $O $3,520,000 < Prev 6 of 25 Save & Ex Next
ACME Co. paid $110,000 for the net assets of Comb Corp. At the time of the acquisition the following information was available related to Comb's balance sheet: Book Value Fair Value Current Assets $50,000 $ 50,000 Building 80,000 100,000 Equipment 40,000 50,000 Liabilities 30,000 30,000 What is the amount recorded by ACME for the Building? a. $110,000 b. $20,000 c. $80,000 d. $100,000
Assume that a drilling machine is acquired for the following consideration: cash: $200,000 shares: 20,000 shares with a market value of $4.50 each Machine: Cost $100,000, accumulated depreciation, $75,000, fair value $37,000 The buying company also agrees to assume the liability of the selling company’s accounts payable of $25 000 as part of the drilling machine acquisition. Required: Calculate the acquisition cost of the drilling machine
Hoolia Corporation acquires equipment and patents from another company for $50 million and records the acquisition as an asset acquisition. The equipment has a fair value of $19.20 million and the patents have a fair value of $28.80 million. Neither asset is nonqualifying. At what value does Hoolia record the equipment? Select one: a. $25.0 million b. $20.0 million c. $21.2 million d. $19.2 million
21.