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Concept explainers
a.
Concept Introduction:
Goodwill that needs to be reported in the financial statement after the combination and the amount at which the Public will record its investment in Sif the amount paid by the Public is
b.
Concept Introduction:
Goodwill is the excess payment made over and above the fair value of assets acquired by the parent company to the subsidiary company against the assets and liabilities acquired.
Goodwill that needs to be reported in the financial statement after the combination and the amount at which the Public will record its investment in S if the amount paid by the Public is
c.
Concept Introduction:
Goodwill: It is the excess payment made over and above the fair value of assets acquired by the parent company to the subsidiary company against the assets and liabilities acquired.
Goodwill that needs to be reported in the financial statement after the combination and the amount at which the Public will record its investment in S if the amount paid by the Public is
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Chapter 1 Solutions
Advanced Financial Accounting
- please answer in detail with explanation computation formula with steps thanksarrow_forwardThe general ledger of Megan Corporation as of December 31, 2018, includes the following accounts: Copyrights $ 30,000 Deposits with advertising agency (will be used to promote goodwill) 27,000 Bond sinking fund 70,000 Excess of cost over fair value of identifiable net assets of acquired subsidiary 390,000 Trademarks 120,000 In the preparation of Megan's statement of financial position as of December 31, 2018, what should be reported as total intangible assets?arrow_forwardEngland Company assembled the following data relative to o certain entity in determining the amount to be paid for net assets and goodwill: 2,600,000 Assets at fair value before goodwill Liabilities 1,700,000 Shareholders' equity Net earnings after elimination of unusual or infrequent items: 200,000 230,000 300,000 250,000 270,000 2018 2019 thucms 2020 2021 Required: Calculate the amount of goodwill under the following: 1. Average earnings are capitalized at 10%. 2. A return of 8% is considered normal on net assets at far value. Excess earnings are capitalized at 15%. 3. A return of 10% is considered normal on net assets at fau value. Goodwill is measured at 5 years excess earnings. Goodwill is measured by the present value method using 12% rate. The present value of an ordinary annuity of 12% for 10 years is 5.65.arrow_forward
- On December 31, Year 1, P Company obtains control over the net assets of S Company by purchasing 100% of the ordinary shares of S Company. P Company paid for the purchase by issuing ordinary shares with a fair value of $44,000. In addition, P Company paid $1,000 for professional fees to facilitate the transaction. The following information has been assembled just prior to the acquisition date: Show Transcribed Text Goodwill Plant assets (net) Current assets Shareholders' equity Long-term debt Current liabilities Show Transcribed Text (i) the acquisition method (ii) the new-entity method Carrying Amount $ 80,000 50.000 $130,000 $ 75,000 25,000 30.000 3 $130,000 ü P Company 3 Fair Value $ 38,000 90,000 55,000 $ 183,000 $ 29,000 30,000 Carrying Amount $ 20.000 15,000 $35.000 $18,000 7,000 10,000 S Company $35,000 Fair Value $ 22,000 26,000 14.000 $ 62,000 $ 8,000 10,000 Required (a) Prepare a consolidated statement of financial position for P Company and calculate the debt-to-equity ratio…arrow_forwardThe general ledger of Grumpy Corporation as of December 31, 2021, includes the following accounts: Соprights Deposits with advertising agency (will be used to promote goodwill) 27,000 Discount on bonds payable Excess of cost over fair value of identifiable net assets of Р30,000 70,000 acquired subsidiary Trademarks 90,000 90,000 In the preparation of Grumpy's balance sheet as of December 31, 2021, what should be reported as total intangible assets?arrow_forwardThe general ledger of Sunland Corporation as of December 31, 2021, includes the following accounts: Copyrights $ 56000 Deposits with advertising agency (will be used to promote goodwill) 33000 Discount on bonds payable 76000 Excess of cost over fair value of identifiable net assets of Acquired subsidiary 540000 Trademarks 71000 In the preparation of Sunland's balance sheet as of December 31, 2021, what should be reported as total intangible assets? $644000. $611000. $667000. $700000.arrow_forward
- High Company purchased for cash at P5,0 per share ll 150,000 ordinary shares outstanding of another entity. The statement of financial position of the acquiree on the date of acquisition showed net assets with a carrying amount of P6,000,000. The fair value of property, plant, and equipment on same date was P800,000 in excess of carrying amount. What amount should be recorded as goodwill on the date of purchase? a. 1,500,000 b. 800,000 700,000 d. с.arrow_forwardDetermine the total assets of Lamp Co. immediatelty after the business combination if contingetn expenses of P100,000 are estimated to be incurred after 1 year.arrow_forwardMinMin Co. assembled the following data relative to a certain entity in determining the amount to be paid for net assets and goodwill: Identifiable assets at fair value P 2,600,000 Liabilities at fair value 900,000 Net assets at fair value 1,700,000 Earnings over the previous 5 years were as follows: 150,000 180,000 250,000 200,000 220,000 2017 2018 2019 2020 2021 Additional information • Key management bonus over the previous 5 years amounted to P200,000 • Loss on sale of equipment amount to 50,000 • A return of 10% is considered normal on net assets at fair value. Calculate the amount of goodwill under the following: 1. Average earnings capitalized at 10% 2. How much is the correct cost of the trademark? 4)arrow_forward
- HELP MEarrow_forwardHow much should be disclosed as "related party balances" in the notes to the financial statements of OAKLAND's CONSOLIDATED financial statements for the year ended December 31arrow_forwardIn business combination, the fair value of combinee bonds payable was $ 120,000 and the carrying amount of bonds payable was $ 100,000. The journal entry to allocate liquidated company to identifiable assets and liabilities with remainder to goodwill includes: а. Credit to premium on bonds payable $ 20,000. b. Debit to discount on bonds payable $ 20,000. C. Credit to bonds payable $ 120,000. d. Debit to premium on bonds payable $ 20,000arrow_forward
- Auditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage LearningIntermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
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