Melton Devices acquires Beck, a small start-up company, by paying $2,170,900 in cash on January 2. Following are the book values and fair values of Beck on the date of acquisition.(Click the icon to view the book values and fair values.)Read the requirements.Requirement a. What is the amount of goodwill acquired?The amount of goodwill acquiredRequirement b. What intangible assets are acquired? Which of the intangibles have an indefinite life? Which will be amortized? What will the amortization expense be in the year after acquisition? (If an input fieldis not used in the table leave the field empty, do not enter a zero)IntangibleAssetFinite orIndefinite LifeAmortizationAmortized?ExpenseTrial BalanceBeckBook ValueFair ValueCash$29,000 $29,000Receivables100,700100,650Manufacturing Equipment640,350654,500Patents (remaining life 8 years)60,600684,000Trademarks14,650187,500Payables58,90458,904PrintDone

The objective of the question is to calculate the amount of goodwill acquired in the acquisition of…

Answered: Melton Devices acquires Beck, a small…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Geet Marketing is acquiring Tusk Co. for $565,000 in cash. Tusk has fixed assets with a book value of $302,000 and an estimated market value of $400,000, plus net working capital of $57,000. What amount of goodwill will Geet Marketing record in its books?
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Tea Tree Bay Ltd acquires a Gizmo Machine from Jetsons Ltd for the following consideration:Cash $20,000Land In the books of Tea Tree Bay Ltd the land is recordedat its cost of $100,000. It has a fair value of $140,000.Equipment: In the books of Tea Tree Bay Ltd the equipment is recorded at a cost of$50,000. The equipment has an accumulated depreciation balance of $20,000.The fair value of the equipment is $23,000Assumptionof liabilityTea Tree Bay Ltd also agrees to assume the liability of Jetsons Ltd’s bank loanof $30,000 as part of the Gizmo Machine acquisition.OtherassociatedcostsTea Tree Bay Ltd also spends $5,000 as the installation cost. Testing cost was$2,500. The transportation cost for the machine was $700.During the first year of operation, the company paid $650 as the maintenance costfor the machine.Required:a) Calculate the acquisition cost of the Gizmo Machine that will be used as the base for futuredepreciation charges.b) Provide the journal entries that would appear in…
Tea Tree Bay Ltd acquires a Gizmo Machine from Jetsons Ltd for the following consideration: 1) Cash: $20,000 2) Land: In the books of Tea Tree Bay Ltd the land is recorded at its cost of $100,000. It has a fair value of $140,000. 3) Equipment: In the books of Tea Tree Bay Ltd the equipment is recorded at a cost of $50,000. The equipment has an accumulated depreciation balance of $20,000. The fair value of the equipment is $23,000 4) Assumption of liability: Tea Tree Bay Ltd also agrees to assume the liability of Jetsons Ltd’s bank loan of $30,000 as part of the Gizmo Machine acquisition. 5) Other associated costs: Tea Tree Bay Ltd also spend $5,000 as the installation cost. Testing cost was $2,500. Transportation cost for the machine was $700. During first year of operation, the company paid $650 as the maintenance cost for the machine. Required: a) Calculate the acquisition cost of the Gizmo Machine that will be used as the base for future depreciation charge. b)…
Easter Company’s 12/31/2021 statement of financial position reports assets of $5,000,000 and liabilities of $2,000,000. All of Easter’s assets’ book values approximate their fair value, except for land, which has a fair value that is $300,000 greater than its book value. On 12/31/2021, Wendell Corporation paid $5,100,000 to acquire Easter. Calculate the amount of goodwill Wendell should record as a result of this purchase.
The Bronco Corporation exchanged land for equipment. The land had a book value of $120,000 and a fair value of $150,000. Bronco paid the owner of the equipment $10,000 to complete the exchange which has commercial substance. Required: 1. What is the fair value of the equipment? 2. Prepare the journal entry to record the exchange.
The Bronco Corporation exchanged land for equipment. The land had a book value of $136,000 and a fair value of $182,000. Bronco paid the owner of the equipment $26,000 to complete the exchange which has commercial substance. Required: 1. What is the fair value of the equipment? 2. Prepare the journal entry to record the exchange. Complete this question by entering your answers in the tabs below. Required 1 Required 2 What is the fair value of the equipment? Fair value
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5. How should accounting fees for acquisition be treated? A. Expensed in the period of acquisition B. Capitalized as part of acquisition cost C. Deferred and amortized D. Deferred until the company is disposed of or wound-up 6.The excess of the price paid over the fair value of the net identifiable assets acquired should be recognized as A. Goodwill to be amortized periodically for 20 yearS. B. Expenses immediately C. Goodwill not subject to amortization but subject to impairment D. Goodwill to be amortized for 40 years 7.Under PFRS 3 (Business Combinations) A. Both direct and indirect costs are to be capitalized B. Both direct and indirect costs are to be expensed C. Direct costs are to be capitalized and indirect costs are to be expensed D. Indirect costs are to be capitalized and direct costs are to be expensed
! Required information [The following information applies to the questions displayed below.] The following information relates to the intangible assets of Lettuce Express: a. On January 1, 2021, Lettuce Express completed the purchase of Farmers Produce, Ic., for $1,590,000 in cash. The fair value of the identifiable net assets of Farmers Produce was $1,431,000. b. Included in the assets purchased from Farmers Produce was a patent for a method of processing lettuce valued at $54,000. The original legal life of the patent was 20 years. There are still 17 years left on the patent, but Lettuce Express estimates the patent will be useful for only 10 more years. c. Lettuce Express acquired a franchise on July 1, 2021, by paying an initial franchise fee of $187,600. The contractual life of the franchise is seven years. 2. Prepare the intangible asset section of the December 31, 2021, balance sheet. LETTUCE EXPRESS Balance Sheet December 31, 2021 (Intangible Assets Section) Intangible Assets…

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