Required information [The following information applies to the questions displayed below.] 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 Required: 1. How much goodwill was involved in this merger? William Company Goodwill $40,000 70,000 $110,000 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. $12,000 22,000 76,000 $110,000
Required information [The following information applies to the questions displayed below.] 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 Required: 1. How much goodwill was involved in this merger? William Company Goodwill $40,000 70,000 $110,000 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. $12,000 22,000 76,000 $110,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Required information
[The following information applies to the questions displayed below.]
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
Goodwill
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](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa71fdef6-625b-4f6b-ba60-dc697dcf35aa%2F9c29444f-9663-4451-9193-8575680195be%2Fjc4ite8_processed.png&w=3840&q=75)
Transcribed Image Text:12
ok
t
1
nces
Required information
[The following information applies to the questions displayed below.]
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
Goodwill
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
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