Oak company is considering purchasing ekc company this question solution Oak Company is considering purchasing EKC Company. EKC's balance sheet at December31, 2016, is as follows:CashAccounts receivableInventory$46,000 Current liabilities $58,00070,000100,000Bonds payable175,000Common stock240,000Property, plant, and equipment (net) 580,000 Retained earnings 322,000$796,000$796,000At December 31, 2016, Oak discovered the following about EKC:-No allowance for uncollectible accounts has been established. An allowance of $4,400 isconsidered appropriate.-The LIFO inventory method has been used. The FIFO inventory method would be used ifEKC were purchased by Oak. The FIFO inventory valuation of December 31, 2016, endinginventory would be $158,000.-The fair value of the property, plant, and equipment (net) is $700,000.-The company has an unrecorded patent that is worth $100,000.-The book values of the current liabilities and bonds payable are the same as their marketvalues.Required:Compute the value of the goodwill if Oak pays $1,300,600 for EKC.

Step 1: Define GoodwillGoodwill is an intangible asset that will not be recognized if internally…

Answered: Oak Company is considering purchasing…

Fundamentals Of Financial Management, Concise Edition (mindtap Course List)

10th Edition

ISBN:9781337902571

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter3: Financial Statements, Cash Flow, And Taxes

Section: Chapter Questions

Problem 19SP

See similar textbooks

Similar questions

Birch Company is considering purchasing EKC Company. EKC's balance sheet at December 31, 2019, is as follows: Cash $51,000 Current liabilities $56,000 Accounts receivable 76,000 Bonds payable 194,000 Inventory 130,000 Common stock 290,000 Property, plant, and equipment (net) 630,000 Retained earnings 347,000 $887,000 $887,000 At December 31, 2019, Birch discovered the following about EKC: No allowance for uncollectible accounts has been established. An allowance of $5,200 is considered appropriate. The LIFO inventory method has been used. The FIFO inventory method would be used if EKC were purchased by Birch. The FIFO inventory valuation of the December 31, 2019, ending inventory would be $181,000. The fair value of the property, plant, and equipment (net) is $780,000. The company has an unrecorded patent that is worth $100,000. The book values of the current liabilities and bonds payable are the same as their market values. Required: 1. Compute the value…
Vasquez Manufacturing Company decided to expand further by purchasing Wasserman Company. The statement of financial position of Wasserman Company as of 31 December 2020 was as follows: Wasserman Company Statement of Financial Position 31 December 2020 Assets Plant assets (net) Inventory Receivables RM1,025,000 275,000 550,000 210,000 Equity and Liabilities Share capital-ordinary Retained earnings Accounts payable RM 800,000 885,000 375.000 Cash Total assets RM2.060,000 Total equity and liabilities RM2,060,000 An appraisal, agreed to by the parties, indicated that the fair value of the inventory was RM350,000 and the fair value of the plant assets was RM1,125,000. The fair value of the receivables is equal to the amount reported on the statement of financial position. The agreed purchase price was RM2,095,000, and this amount was paid in cash to the previous owners of Wasserman Company. REQUIRED: Determine the amount of goodwill (if any) implied in the purchase price of RM2,095,000.…
Goodwill Valman Company is considering purchasing EKC Company. EKC's balance sheet at December 31, 2019, is as follows: Cash $54,000 Current liabilities $64,000 Accounts receivable 65,000 Bonds payable 219,000 Inventory 140,000 Common stock 350,000 Property, plant, and equipment (net) 600,000 Retained earnings 226,000 $859,000 $859,000 At December 31, 2019, Valman discovered the following about EKC: No allowance for uncollectible accounts has been established. An allowance of $4,500 is considered appropriate. The LIFO inventory method has been used. The FIFO inventory method would be used if EKC were purchased by Valman. The FIFO inventory valuation of the December 31, 2019, ending inventory would be $204,000. The fair value of the property, plant, and equipment (net) is $720,000. The company has an unrecorded patent that is worth $100,000. The book values of the current liabilities and bonds payable are the same as their market values. Required: 1.…
A comparative balance sheet for Gena Company appears below:GENA COMPANYComparative Balance SheetDec. 31, 2021 Dec. 31, 2020AssetsCash $ 34,000 $11,000Accounts receivable 21,000 13,000Inventory 35,000 17,000Prepaid expenses 6,000 9,000Long-term investments -0- 17,000Equipment 60,000 33,000Accumulated depreciation—equipment (20,000) (15,000)Total assets $136,000 $85,000Liabilities and Stockholders' EquityAccounts payable $ 17,000 $ 7,000Bonds payable 36,000 45,000Common stock 53,000 23,000Retained earnings 30,000 10,000Total liabilities and stockholders' equity $136,000 $85,000Additional information:1. Net income for the year ending December 31, 2021 was $35,000.2. Cash dividends of $15,000 were declared and paid during the year.3. Long-term investments that had a cost of $17,000 were sold for $14,000.4. Depreciation expense for the year was $5,000.InstructionsPrepare a full statement of cash flows for the year ended December 31, 2021, using the indirectmethod.
Venti Manufacturing Company decided to expand further by purchasing Wasserman Company. The statement of financial position of Warrior Company as of 31 December 2020 was as follows: Warrior Company Statement of Financial Position 31 December 2020 Assets RM Equity and Liabilities RM Plant assets (net) 1,025,000 Share capital-ordinary 800,000 Inventory 275,000 Retained earnings 885,000 Receivables 550,000 Accounts payable 375,000 Cash 210,000 Total assets 2,060,000 Total equity & liabilities 2,060,000 An appraisal, agreed to by the parties, indicated that the fair value of the inventory was RM350,000 and the fair value of the plant assets was RM1,125,000. The fair value of the receivables is equal to the amount reported on the statement of financial position. The agreed purchase price was RM2,095,000, and this amount was paid in cash to the…
Kindly help me Accounting question
The comparative balance sheets for Metlock Corporation show the following information. December 312020 2019Cash $33,500 $12,900Accounts receivable 12,400 10,000Inventory 12,100 9,000Available-for-sale debt investments –0– 3,000Buildings –0– 29,800Equipment 44,800 19,900Patents 5,000 6,300 $107,800 $90,900Allowance for doubtful accounts $3,100 $4,500Accumulated depreciation—equipment 2,000 4,500Accumulated depreciation—building –0– 6,000Accounts payable 5,000 3,000Dividends payable –0– 4,900Notes payable, short-term (nontrade) 3,000 4,100Long-term notes payable 31,000 25,000Common stock 43,000 33,000Retained earnings 20,700 5,900 $107,800 $90,900 Additional data related to 2020 are as follows. 1. Equipment that had cost $11,000 and was 40% depreciated at time of disposal was sold for $2,500.2. $10,000 of the long-term note payable was paid by issuing common stock.3. Cash dividends paid were $4,900.4. On January…
Linden Corporations is negotiating for the purchase of Hill Company. The following is an abbreviated balance sheet of Hill. Hill Company Balance Sheet As of December 31, 2025 Assets Liabilities and Stockholders’ Equity Cash $100,000 Accounts payable $150,000 Land 230,000 Notes payable (long-term) 250,000 Equipment, net 200,000 Common stock 140,000 Trademark 40,000 Retained earnings 30,000…
Condensed balance sheet and income statement data for Pina Corporation are presented here. PINA CORPORATIONBalance SheetsDecember 31 2022 2021 2020 Cash $ 32,000 $ 22,000 $ 20,000 Accounts receivable (net) 52,000 47,000 50,000 Other current assets 97,000 102,000 71,000 Investments 62,000 77,000 52,000 Plant and equipment (net) 500,000 370,000 358,000 $743,000 $618,000 $551,000 Current liabilities $ 87,000 $ 82,000 $ 72,000 Long-term debt 152,000 92,000 57,000 Common stock, $10 par 327,000 317,000 307,000 Retained earnings 177,000 127,000 115,000 $743,000 $618,000 $551,000 PINA CORPORATIONIncome StatementsFor the Years Ended December 31 2022 2021 Sales revenue $747,000 $607,000 Less: Sales returns and allowances 42,000 32,000 Net sales…
he condensed balance sheet and income statement data for SymbiosisCorporation are presented below.SYMBIOSIS CORPORATIONBalance SheetsDecember 312014 2013 2012Cash $ 30,000 $ 24,000 $ 20,000Accounts receivable (net) 110,000 48,000 48,000Other current assets 80,000 78,000 62,000Investments 90,000 70,000 50,000Plant and equipment (net) 503,000 400,000 360,000$813,000 $620,000 $540,000 Current liabilities $ 98,000 $ 75,000 $ 70,000Long-term debt 130,000 75,000 65,000Common stock, $10 par 400,000 340,000 300,000Retained earnings 185,000 130,000 105,000$813,000 $620,000 $540,000SYMBIOSIS CORPORATIONIncome StatementsFor the Years Ended December 312014 2013Sales revenue $800,000 $750,000Less: Sales returns and allowances 40,000 50,000Net sales 760,000 700,000Cost of goods sold 420,000 406,000Gross profit 340,000 294,000Operating expenses (including income taxes) 230,000 209,000Net income $110,000 $ 85,000Additional information:1. The market price of Symbiosis common stock was $5.00, $3.50, and…
The following are preliminary financial statements for Choco Co. and Cake Co. for the year ending December 31, 2020 prior to Choco’s acquisition of Cake. Choco Co. Cake Co. Book Values Book Values Fair Values Cash and Receivable 120,000 30,000 30,000 Inventories 240,000 90,000 94,000 Land 120,000 108,000 128,000 Building 480,000 336,000 348,000 Accounts payable (70,000) (100,000) (100,000) Long-term debt (38,000) (32,000) (34,000) Common stock (192,000) (72,000) Additional paid in capital (96,000)…
Below is Company A's balance sheet at the end of 2022. What is the gross profits of Company A? 2022 AmountNet sales$1,000.0Variable operating costs 770.0Fixed operating costs 50.0Depreciation and 50.0Interest30.0Taxes20.0Preferred dividends5.0Common dividends25.0 amortization Group of answer choices $130 $230 $180 $1,000

SEE MORE QUESTIONS

Recommended textbooks for you

Fundamentals Of Financial Management, Concise Edi…

Finance

ISBN:

9781337902571

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

Intermediate Accounting: Reporting And Analysis

Accounting

ISBN:

9781337788281

Author:

James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:

Cengage Learning

Fundamentals Of Financial Management, Concise Edi…

Finance

ISBN:

9781337902571

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

Intermediate Accounting: Reporting And Analysis

Accounting

ISBN:

9781337788281

Author:

James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:

Cengage Learning

Cornerstones of Financial Accounting

Accounting

ISBN:

9781337690881

Author:

Jay Rich, Jeff Jones

Publisher:

Cengage Learning

SEE MORE TEXTBOOKS