Homework Help is Here – Start Your Trial Now!
Business
Accounting
What amount of goodwill will be reported?

What amount of goodwill will be reported?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question

What amount of goodwill will be reported?

Power Corporation acquired 70 percent of Silk Corporation's common stock on December 31, 20x2. Balance sheet data for the two companies immediately following acquisition follow: Item Power Silk 30,000 45,000 Cash P 44,000 110,000 P Accounts Receivable Inventory 130,000 80,000 500,000 (223,000) 150,500 791,500 70,000 25,000 400,000 Land Buildings and equipment Less: Accumulated depreciation Investment in Silk Corporation stock (165,000) Total Assets P 405,000 61,500 Accounts payable Taxes payable Bonds payable 28,000 37,000 200,000 95,000 280,000 150,000 205,000 791,500 Common stock Retained earnings Total Liabilities and Stockholders' Equity P 50,000 90,000 405,000 After the date of the business combination, the book value of Silk's net assets and liabilities approximated their fair value except for inventory, which had a fair value of P85,000, and land, which had a fair value of P45, 000. The fair value of the non-controlling interest was P64,500 on December 31, 20x2. For each of the question below, indicate the appropriate total that should appear in the consolidated balance sheet immediately after the business combination on the basis of full-goodwill approach:
Transcribed Image Text:Power Corporation acquired 70 percent of Silk Corporation's common stock on December 31, 20x2. Balance sheet data for the two companies immediately following acquisition follow: Item Power Silk 30,000 45,000 Cash P 44,000 110,000 P Accounts Receivable Inventory 130,000 80,000 500,000 (223,000) 150,500 791,500 70,000 25,000 400,000 Land Buildings and equipment Less: Accumulated depreciation Investment in Silk Corporation stock (165,000) Total Assets P 405,000 61,500 Accounts payable Taxes payable Bonds payable 28,000 37,000 200,000 95,000 280,000 150,000 205,000 791,500 Common stock Retained earnings Total Liabilities and Stockholders' Equity P 50,000 90,000 405,000 After the date of the business combination, the book value of Silk's net assets and liabilities approximated their fair value except for inventory, which had a fair value of P85,000, and land, which had a fair value of P45, 000. The fair value of the non-controlling interest was P64,500 on December 31, 20x2. For each of the question below, indicate the appropriate total that should appear in the consolidated balance sheet immediately after the business combination on the basis of full-goodwill approach:
Expert Solution
steps

Step by step

Solved in 2 steps with 1 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Accounting for Intangible assets
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS