Mainline Produce Corporation acquired all the outstanding common stock of Iceberg Lettuce Corporation for $32,000,000 in cash. The book values and fair values of Iceberg's assets and liabilities were as follows: Current assets Book Value Fair Value $12,000,000 $15,000,000 Property, plant, and equipment 21,400,000 27,400,000 Other assets Current liabilities Long-term liabilities 3,600,000 4,600,000 8,000,000 8,000,000 14,000,000 13,000,000 Required: Calculate the amount paid for goodwill.

Mainline Produce Corporation acquired all the outstanding common stock of Iceberg Lettuce Corporation for $32,000,000 in cash. The book values and fair values of Iceberg's assets and liabilities were as follows: Current assets Book Value Fair Value $12,000,000 $15,000,000 Property, plant, and equipment 21,400,000 27,400,000 Other assets Current liabilities Long-term liabilities 3,600,000 4,600,000 8,000,000 8,000,000 14,000,000 13,000,000 Required: Calculate the amount paid for goodwill.

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter12: Auditing Long-lived Assets And Merger And Acquisition Activity

Section: Chapter Questions

Problem 37RQSC

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Mainline Produce Corporation acquired all the outstanding common stock of Iceberg Lettuce Corporation for $33,000,000 in cash The book values and fair values of Iceberg's assets and liabilities were as follows: Current assets Property, plant, and equipment Other assets Current liabilities Long-term liabilities. Required: Book Value $ 12,800,000 26,800,000 Fair Value $ 15,800,000 32,800,000 4,400,000 5,400,000 8,800,000 16,200,000 8,800,000 15,200,000 Calculate the amount paid for goodwill. (Enter your answer in millions (i.e. 5,000,000 should be entered as 5).) Amount paid for goodwill million
Mainline Produce Corporation acquired all the outstanding common stock of Iceberg Lettuce Corporation for $30,000,000 in cash. The book values and fair values of Iceberg's assets and liabilities were as follows: Current assets Property, plant, and equipment Current liabilities Book Value $ 10,200,000 21,000,000 1,800,000 7,200,000 11,800,000 Fair Value $ 13,200,000 Other assets Long-term liabilities Required: 27,000,000 2,800,000 7,200,000 10,800,000 Calculate the amount paid for goodwill. (Enter your answer in millions (i.e. 5,000,000 should be entered as 5).) Amount paid for goodwill million
New Harvest Bakery acquired all the outstanding common stock of Red Rock Bakery for $72,800 in cash. The book values and fair values of Red Rock's assets and liabilities were as follows: Book Value Fair Value Current assets Property, plant, and equipment Other assets Current liabilities Long-term liabilities $25,100 43,900 4,900 18,000 25,600 $23,900 50,400 5,700 14,600 20,500 Calculate the amount paid for goodwill. Goodwill
Purple Corp. purchased all of the listed assets and liabilities of Sudden Corp. for $1,600,000. The following assets and liabilities were purchased:Book Value Fair MarketValueAccounts receivables $ 140,000 $ 140,000 Inventory 168,000 256,000 Property, plant, and equipment (net) 820,000 1,040,000 Patent 0 276,000 Liabilities (170,000 ) (170,000 )________________________________________ Required:1. What is the appropriate amount that would be recorded for goodwill? 2. Prepare the journal entry for the acquisition. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
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Northern Equipment Corporation purchased all the outstanding common stock of Pioneer Equipment Rental for $5,600,000 in cash. The book values and fair values of Pioneer’s assets and liabilities were Book Value Fair ValueAccounts Receivable $ 750,000 $ 650,000Buildings 4,100,000 4,800,000Equipment 110,000 200,000Accounts Payable (750,000) (750,000)Net assets $ 4,210,000 $ 4,900,000Required:1. Calculate the amount Northern Equipment should report for goodwill.2. Record Northern Equipment’s acquisition of Pioneer Equipment Rental.
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Action, Inc. acquired the following assets and assumed the related liabilities of Slacker Corp. in a transaction completed on February 16, 2023: Accounts receivable, net Inventories Property, plant & equipment Non-amortizable intangible assets Carrying value for Slacker Current liabilities Noncurrent liabilities $ 11,000 $ 50,000 $ 100,000 $ 200,000 Fair Value $ 10,000 $ 50,000 $ 150,000 $ 225,000 $ (40,000) $(200,000) $ (40,000) $(200,000) Action paid $205,000 in cash for all of the above from Slacker. a) Determine if Action must record any goodwill. Show any calculations. b) Record the acquisition in Action's general journal on Feb. 16, 2023. Show: any calculations. c) Prepare any adjusting entry for amortization required as of the fiscal year end, December 31, 2023. If no amortization is required, explain why.
SFFN Corp. purchased the entire business of AZC, Inc. including all its assets and liabilities for $1,800,000. Below is information related to the two companies: SFFN AZC Fair value of assets $ 3,050,000 $ 1,600,000 Fair value of liabilities 2,575,000 800,000 Reported assets 2,800,000 1,400,000 Reported liabilities 2,500,000 750,000 Net Income for the year 460,000 250,000 How much goodwill will SFFN recognize as a result of its acquisition of AZC? Select one: a. $-0- b. $1,225,000 c. $1,150,000 d. $200,000 e. $1,000,000
Cozzi Company is being purchased and has the following balance sheet as of the purchase date: Current assets $200,000 Liabilities $ 90,000 Fixed assets 180,000 Equity 290,000 Total $380,000 Total $380,000 The price paid for Cozzi's net assets is $500,000. The fixed assets have a fair value of $220,000, and the liabilities have a fair value of $110,000. The amount of goodwill to be recorded in the purchase is: Select one: a.$150,000 b.$0 c.$190,000 d.$170,000
On January 1, 20X1, Promo, Inc. purchased 70% of Set Corporation for $469,000. On that date the book value of the net assets of Set totaled $500,000. Based on the appraisal done at the time of the purchase, all assets and liabilities had book values equal to their fair values except as follows: Book Value Fair Value Inventory $100,000 $120,000 Land 75,000 85,000 Equipment (useful life 4 years) 125,000 165,000 The remaining excess of cost over book value was allocated to a patent with a 10-year useful life. During 20X1 Promo reported net income of $200,000 and Set had net income of $100,000. What income from subsidiary did Promo include in its net income if Promo uses the simple equity method? a. $33,000 b. $42,000 c. $70,000 d. $100,000
18. Power Company purchased Sark Corporation’s net assets on January 3, 20X2, for $635,000 cash. In addition, Power incurred $8,000 of direct costs in consummating the combination. At the time of acquisition, Sark reported the following historical cost and current market data: Balance Sheet Item Book Value Fair Value Assets Cash and Receivables $ 67,000 $ 67,000 Inventory 108,000 154,000 Buildings and Equipment (net) 210,000 305,000 Patent 0 202,000 Total Assets $ 385,000 $ 728,000 Liabilities and Equities Accounts Payable $ 22,000 $ 22,000 Common Stock 92,000 Additional Paid-In Capital 70,000 Retained Earnings 201,000 Total Liabilities and Equities $ 385,000 Required: Prepare the journal entry or entries with which Power recorded its acquisition of Sark’s net assets. A. Record the payment of acquisition costs. B. Record the acquisition of Sark Corporation's net assets.