On January 4, David Company acquired all of the net assets (assets and liabilities) of William Company for $134,000 cash. The two companies merged, with David Company surviving. On the date of acquisition, William's balance sheet included the following. Balance Sheet at January 4 Cash Property and equipment (net) Total assets Liabilities Common stock (par $5) Retained earnings Total liabilities and stockholders' equity The property and equipment had a fair value of $55,000. William also owned an internally developed patent with a fair value of $5,000 (thus, not recorded as an asset on William's balance sheet). The book values of the cash and liabilities were equal to their fair values. Required: 1. How much goodwill was involved in this merger? William Company $40,000 70,000 $110,000 $12,000 22,000 76,000 $110,000 Goodwill

On January 4, David Company acquired all of the net assets (assets and liabilities) of William Company for $134,000 cash. The two companies merged, with David Company surviving. On the date of acquisition, William's balance sheet included the following. Balance Sheet at January 4 Cash Property and equipment (net) Total assets Liabilities Common stock (par $5) Retained earnings Total liabilities and stockholders' equity The property and equipment had a fair value of $55,000. William also owned an internally developed patent with a fair value of $5,000 (thus, not recorded as an asset on William's balance sheet). The book values of the cash and liabilities were equal to their fair values. Required: 1. How much goodwill was involved in this merger? William Company $40,000 70,000 $110,000 $12,000 22,000 76,000 $110,000 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

Similar questions

On March 31, 2024, Wolfson Corporation acquired all of the outstanding common stock of Barney Corporation for $17,400,000 in cash. The book values and fair values of Barney’s assets and liabilities were as follows: Book Value Fair Value Current assets $ 6,400,000 $ 7,900,000 Property, plant, and equipment 11,400,000 14,400,000 Other assets 1,040,000 1,540,000 Current liabilities 4,400,000 4,400,000 Long-term liabilities 6,400,000 5,900,000 Required: Calculate the amount paid for goodwill.
Adams, Incorporated, acquires Clay Corporation on January 1, 2023, in exchange for $550,400 cash. Immediately after the acquisition, the two companies have the following account balances. Clay’s equipment (with a five-year remaining life) is actually worth $537,600. Credit balances are indicated by parentheses. Items Adams Clay Current assets $ 480,000 $ 236,000 Investment in Clay 550,400 0 Equipment 713,600 462,000 Liabilities (261,000) (232,000) Common stock (350,000) (150,000) Retained earnings, 1/1/23 (1,133,000) (316,000) In 2023, Clay earns a net income of $50,400 and declares and pays a $5,000 cash dividend. In 2023, Adams reports net income from its own operations (exclusive of any income from Clay) of $201,000 and declares no dividends. At the end of 2024, selected account balances for the two companies are as follows: Items Adams Clay Revenues $ (508,000) $ (360,000) Expenses 368,300 270,000 Investment income Not given 0 Retained earnings,…
Professor Corporation acquired 70 percent of Scholar Corporation's common stock on December 31, 20X4, for $102,200. The fair value of the noncontrolling interest at that date was determined to be $43,800. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition: Item Cash Accounts Receivable Inventory Land Buildings & Equipment Less: Accumulated Depreciation Investment in Scholar Corporation Total Assets Accounts Payable Mortgage Payable Common Stock Retained Earnings Total Liabilities & Stockholders' Equity Assets Cash Professor Scholar Corporation Corporation $50,300 Accounts receivable Inventory Land Buildings and equipment Less: Accumulated depreciation Investment in Scholar Corporation Total Assets Liabilities & Equity Accounts payable Mortgage payable Common stock Retained earnings NCI in Net assets of Scholar Corporation Total Liabilities & Equity 90,000 130,000 60,000 410,000 (150,000) 102,200 $ 692,500 $152,500 250,000…
On January 2, 2014, Prunce Company acquired 90% of the outstanding common stock of Sun Company for $180,700 cash. Just before the acquisition, the balance sheets of the two companies were as follows: Prunce Sun Cash $282,130 $ 59,040 Accounts receivable (net) 142,020 24,810 Inventory 118,670 53,230 Plant and equipment (net) 395,640 92,960 Land 62,550 29,220 Total asset $1,001,010 $259,260 Accounts payable $106,440 $ 50,420 Mortgage payable 67,320 37,660 Common stock, $2 par value 421,400 76,960 Other contributed capital 217,440 21,970 Retained earnings 188,410 72,250 Total equities $1,001,010 $259,260 The fair values of Sun Company’s assets and liabilities are equal to their book values with the exception of land. (a) Your answer is correct. Prepare a journal entry to record the purchase of Sun Company’s common stock.…
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
Putt Corporation acquired 80 percent of Slice Company's voting common stock on January 1, 20X4, for $138,000. At that date, the fair value of the noncontrolling interest was $34,500. Slice's balance sheet at the date of acquisition contained the following balances: Cash Accounts Receivable Land Building and Equipment Less: Accumulated Depreciation Total Assets SLICE COMPANY Balance Sheet January 1, 20X4 $ 20,000 35,000 90,000 300,000 (85,000) $360,000 Accounts Payable Notes Payable Common Stock Additional Paid-in Capital Retained Earnings Total Liabilities and Stockholders' Equity $ 35,000 180,000 100,000 75,000 (30,000) $360,000 At the date of acquisition, the reported book values of Slice's assets and liabilities approximated fair value. Required: Prepare the consolidation entry or entries needed to prepare a consolidated balance sheet immediately following the business combination. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first…
On January 1, Year 1, Big Corporation acquired 40% interest in Small Company for $300,000. At the date of acquisition, Small Company's equity (net assets) had a book value of $550,000 and a fair value of $600,000. The difference between the book value and the fair value relates to equipment being depreciated over the remaining useful life of 10 years. During Year 1, Small Company had net income of $900,000 and paid a $40,000 dividend. Required: 3. Record the journal entry to depreciate the fair value difference 4. Determine the investment-related amounts to be reported at year-end on Big Corporation's balance sheet
Presented below is information related to Concord Company 1. On July 6, Concord Company acquired the plant assets of Doonesbury Company, which had discontinued operations. The appraised value of the property is: Land Buildings Equipment Total Concord Company gave 12.500 shares of its $100 par value common stock in exchange. The stock had a market price of $168 per share on the date of the purchase of the property 2. Concord Company expended the following amounts in cash between July 6 and December 15, the date when it first occupied the building. Repairs to building Construction of bases for equipment to be installed later Driveways and parking lots Remodeling of office space in building including new partitions and walls Special assessment by city on land 3. On December 20, the company paid cash for equipment, $234.000, subject to a 2% cash discount, and freight on equipment of $9.450. Prepare entries on the books of Concord Company for these transactions. (Do not round intermediate…
Phone Corporation acquired 70 percent of Smart Corporation’s common stock on December 31, 20X4, for $98,000. At that date, the fair value of the noncontrolling interest was $42,000. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition: Item Phone Corporation Smart Corporation Cash $ 52,300 $ 39,000 Accounts Receivable 99,000 59,000 Inventory 136,000 92,000 Land 66,000 49,000 Buildings & Equipment 417,000 268,000 Less: Accumulated Depreciation (151,000) (73,000) Investment in Smart Corporation 98,000 Total Assets $ 717,300 $ 434,000 Accounts Payable $ 141,500 $ 27,000 Mortgage Payable 300,800 288,000 Common Stock 72,000 40,000 Retained Earnings 203,000 79,000 Total Liabilities & Stockholders’ Equity $ 717,300 $ 434,000 At the date of the business combination, the book values of Smart’s assets and liabilities approximated fair value except for inventory, which had a fair value of…
Mans Company is about to purchase the net assets of Eagle Incorporated, which has the following balance sheet: Assets Accounts receivable $ 60,000 Inventory 100,000 Equipment $ 90,000 Accumulated depreciation (50,000) 40,000 Land and buildings $300,000 Accumulated depreciation (100,000) 200,000 Goodwill 60,000 Total assets $460,000 Liabilities and Stockholders' Equity Bonds payable $ 80,000 Common stock, $10 par 200,000 Paid-in capital in excess of par 100,000 Retained earnings 80,000 Total liabilities and equity $460,000 Mans has secured the following fair values of Eagle's accounts: Inventory $130,000 Equipment 60,000 Land and buildings 260,000 Bonds payable 60,000 Acquisition costs were $20,000. Required: Record the entry for the purchase of…
On January 2, 2020, Waterway Company acquired 90% of the outstanding common stock of Oriole Company for $549,000 cash. Just before the acquisition, the balance sheets of the two companies were as follows: Cash Accounts Receivable (net) Inventory Plant and Equipment (net) Land Total Assets Accounts Payable Mortgage Payable Common Stock, $2 par value Other Contributed Capital Retained Earnings Total Equities Waterway $600,000 345,000 295,000 995,000 180,000 1,050,000 580,000 Oriole 303,000 $155,000 $2,415,000 74,000 $2,415,000 $770,000 168,000 $312,000 $134,000 170,000 275,000 98,000 115,000 210,000 60,000 251,000 $770,000 The fair values of Oriole's assets and liabilities are equal to their book values with the exception of land.
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