9. RGW Industries purchased the net assets of SP Company for P1,300,000. A schedule of the net assets of SPCompany, as recorded on SP Company's books at the time of the acquisition, is as follows:AssetsCashReceivableInventoryLand, buildings, and equipment (net)Total assetsLiabilitiesCurrent liabilitiesLong-term debtP31,000250,000302,000350,000P933,000InventoryLand, building and equipmentPatentP90,000185,000P275,000P658,000Total liabilitiesNet assets (book value)The following schedule shows the differences between the recorded costs and market values of the assets of SPCompany at the date of the acquisition:CostP302,000350,0000Purchased in-process research anddevelopmentExisting workforceTotalsP652,000P275,000LiabilitiesDetermine the amount of goodwill to be recognized on the acquisition?a. P642,000c. P74,000b. P464,000d. P164,00000MarketP400,000390,00040,000300,00090,000P1,220,000P275,000

In the case of the acquisition of companies, the value of the cost of control (goodwill or capital…

RGW Industries purchased the net assets of SP Company for P1,300,000. A schedule of the net assets of SP Company, as recorded on SP Company's books at the time of the acquisition, is as follows: Assets Cash Receivable Inventory Land, buildings, and equipment (net) Total assets Liabilities Current liabilities Long-term debt Inventory Land, building and equipment Patent Purchased in-process research and development P31,000 250,000 302,000 350,000 P933,000 Total liabilities P275,000 Net assets (book value) P658,000 The following schedule shows the differences between the recorded costs and market values of the assets of SP Company at the date of the acquisition: Cost P90,000 185,000 P302,000 350,000 0 0 Existing workforce Totals P652,000 Liabilities P275,000 Determine the amount of goodwill to be recognized on the acquisition? a. P642,000 c. P74,000 b. P464,000 d. P164,000 0 Market P400,000 390,000 40,000 300,000 90,000 P1,220,000 P275,000

RGW Industries purchased the net assets of SP Company for P1,300,000. A schedule of the net assets of SP Company, as recorded on SP Company's books at the time of the acquisition, is as follows: Assets Cash Receivable Inventory Land, buildings, and equipment (net) Total assets Liabilities Current liabilities Long-term debt Inventory Land, building and equipment Patent Purchased in-process research and development P31,000 250,000 302,000 350,000 P933,000 Total liabilities P275,000 Net assets (book value) P658,000 The following schedule shows the differences between the recorded costs and market values of the assets of SP Company at the date of the acquisition: Cost P90,000 185,000 P302,000 350,000 0 0 Existing workforce Totals P652,000 Liabilities P275,000 Determine the amount of goodwill to be recognized on the acquisition? a. P642,000 c. P74,000 b. P464,000 d. P164,000 0 Market P400,000 390,000 40,000 300,000 90,000 P1,220,000 P275,000

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

Painted Desert has acquired several companies. Assume that Painted Desert purchased Oak Tree Unlimited for $14,000,000 cash. The book value of Oak Tree Unlimited's assets is $14,000,000 (fair value, $15,000,000), and it has liabilities of $13,000,000 (fair value, $13,000,000). Requirements 1. Compute the cost of goodwill purchased by Painted Desert. 2. Record the purchase of Oak Tree Unlimited by Painted Desert. Requirement 1. Compute the cost of goodwill purchased by Painted Desert. Purchase price to acquire Oak Tree Unlimited Fair value of Oak Tree Unlimited's assets Less: Fair value of Oak Tree Unlimited's liabilities Less: Fair value of Oak Tree Unlimited's net assets Goodwill Requirement 2. Record the purchase of Oak Tree Unlimited by Painted Desert. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Date Accounts and Explanation Debit Credit…
ACME Co. paid $110,000 for the net assets of Comb Corp. At the time of the acquisition the following information was available related to Comb's balance sheet: Book Value Fair Value Current Assets $50,000 $ 50,000 Building 80,000 100,000 Equipment 40,000 50,000 Liabilities 30,000 30,000 What is the amount recorded by ACME for the Building? a. $110,000 b. $20,000 c. $80,000 d. $100,000
Plant acquisitions for selected companies are as follows. 1. Novak Industries Inc. acquired land, buildings, and equipment from a bankrupt company, Torres Co., for a lump-sum price of $1.050,000. At the time of purchase, Torres's assets had the following book and appraisal values. Land Buildings Equipment Land Book Values Buildings Equipment Cash $300,000 375,000 450,000 To be conservative, the company decided to take the lower of the two values for each asset acquired. The following entry was made. 225,000 Appraisal Values $225,000 525,000 450,000 375,000 450,000 1,050,000 SUPPORT
Dynamo Manufacturing paid cash to acquire the assets of an existing company. Among the assets acquired were the following items: Patent with 4 remaining years of legal life Goodwill Dynamo's financial condition just prior to the acquisition of these assets is shown in Required B. Required a. Compute the annual amortization expense for these items. b. Record the acquisition of the intangible assets and the related amortization expense for year 1 in a horizontal statements model. Complete this question by entering your answers in the tabs below. Required A Required B Record the acquisition of the intangible assets and the related amortization expense for year 1 in a horizontal statements model. (In the Cash Flo operating activities, FA for financing activities, or IA for investing activity. Leave the cell blank if there is no effect. Enter any decreases to accoun all cells will require entry.) Event Acquisition Amortization Cash + 86,400 + + + Balance Sheet Assets Patent + Goodwill $…
ACME Co. paid $110,000 for the net assets of Comb Corp. At the time of the acquisition the following information was available related to Comb's balance sheet: Book Value Fair Value Current Assets $50,000 $ 50,000 Building 80,000 100,000 Equipment 40,000 50,000 Liabilities 30,000 30,000 What is the amount recorded by ACME for the Building? a. $110,000 b. $20,000 c. $80,000 d. $100,000
Company X purchased Company Y for $4,000,000. The net assets of the company purchased were valued at $3,800,000. What asset will be on Company X's balance sheet for $200,000? Goodwill Amortization Not enough info Equipment
None
Required Information [The following information applies to the questions displayed below] Timberly Construction makes a lump-sum purchase of several assets on January 1 at a total cash price of $830,000. The estimated market values of the purchased assets are building, $467,500, land, $243,100; land improvements, $56,100; and four vehicles, $168,300. Required: 1-a. Allocate the lump-sum purchase price to the separate assets purchased. 1-b. Prepare the journal entry to record the purchase. 2. Compute the first-year depreciation expense on the building using the straight-line method, assuming a 15-year life and a $29,000 salvage value. 3. Compute the first-year depreciation expense on the land improvements assuming a five-year life and double-declining-balance depreciation. Complete this question by entering your answers in the tabs below. Required 3 Allocate the lump-sum purchase price to the separate assets purchased. Required 1A Required 18 Required 2 Allocation of total cost Building…
First Company purchased Second Company for $19,000,000 cash. At the time of purchase, Second Company's assets had a market value of $28,000,000 and the liabilities had a market value of $13,000,000. At the time of the purchase, Second Company's assets had a book value of $15,000,000, and the liabilities had a book value of $9,000,000. What amount of goodwill is recorded?