P Company wishes to acquire S Co.for cash in an asset acquisition, andappraisals reveal that the inventoryhas a fair value $185,000, and theequipment has a current value of$645,000. The book value and fairvalue of liabilities are the same. Thefollowing balance sheets werereported on January 1, 2011, for PCompany and S Company:P Co.$ 150,000Sco.$ 30,000CashInventoryEquipment (net)450,000150,000570,000$750,0001,320,000Total$1,920,000$ 450,000$150,000Total liabilitiesCommon stock, $20 par valueOther contributed capitalRetained earnings600,000300,000375,000105,000495,000195,000$1,920,000$750,000Total Determine the purchase price abovewhich P Co. would record goodwill. *O $705,000O $700,000O $710,000O $695,000None of the options is correctO O O O O

The acquisition method is a method where the acquirer company takeover the assets and liabilities of…

P Company wishes to acquire S Co. for cash in an asset acquisition, and appraisals reveal that the inventory has a fair value $185,000, and the equipment has a current value of $645,000. The book value and fair value of liabilities are the same. The following balance sheets were reported on January 1, 2011, for P Company and S Company: PCo. $ 150,000 SCo. $ 30,000 Cash Inventory 450,000 150,000 Equipment (net) 1,320,000 570,000 Total $1.920,000 $750,000 Total liabilities $ 450,000 $150,000 Common stock, $20 par value Other contributed capital Retained earnings 600,000 300,000 375,000 105,000 495,000 195,000 Total $1,920,000 $750,000

P Company wishes to acquire S Co. for cash in an asset acquisition, and appraisals reveal that the inventory has a fair value $185,000, and the equipment has a current value of $645,000. The book value and fair value of liabilities are the same. The following balance sheets were reported on January 1, 2011, for P Company and S Company: PCo. $ 150,000 SCo. $ 30,000 Cash Inventory 450,000 150,000 Equipment (net) 1,320,000 570,000 Total $1.920,000 $750,000 Total liabilities $ 450,000 $150,000 Common stock, $20 par value Other contributed capital Retained earnings 600,000 300,000 375,000 105,000 495,000 195,000 Total $1,920,000 $750,000

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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