Intermediate Accounting
1st Edition
ISBN: 9780132162302
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
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Textbook Question
Chapter 11, Problem 11.7P
Description | Debit | Credit |
Cash | $ 30,000 | |
Inventory | 100,000 | |
Property, plant, and equipment - Net | 370,000 | |
Current liabilities | $ 50,000 | |
Common stock - No oar | 150,000 | |
300,000 | ||
Totals | $500,000 | $500,000 |
Assume that MPL, Inc. offers to acquire Dark Horse at a purchase price of $650,000. A study of Dark Horse’s assets revealed that the inventory had a fair market value of $180,000 and the plant assets were undervalued by $50,000.
Required
- a. Given this set of assumptions, calculate the amount of goodwill or bargain purchase gain to be recorded on the acquisition.
- b. Assume new that MPL, Inc. offers to acquire Dark Horse at a purchase price of $250,000. Determine the amount of goodwill or bargain purchase gain.
- c. Indicate how to account for goodwill and any gain from a bargain purchase in the financial statements.
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Heartland Telecom provides communication services in Iowa, Nebraska, the Dakotas, and Montana. Heartland Telecom purchased goodwill as part of the acquisition of Samson Wireless Enterprises, which had the following figures:
Data table:
Book value of assets
$800,000
Market value of assets
900,000
Market value of liabilities
510,000
Requirements:
1.
Journalize the entry to record Heartland Telecom's purchase of SamsonSamson Wireless for $400,000cash plus a $600,000 note payable.
2.
What special asset does
Heartland Telecom'sHeartland Telecom's
acquisition of
SamsonSamson
Wirelessidentify? How should
HeartlandHeartland
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SamsonSamson
Wireless? Explain in detail.
Cozzi Company is being purchased and has the following balance sheet as of the purchase date:
$ 90,000
290,000
$380,000
Current assets
$200,000
Liabilities
Fixed assets
180,000
Equity
Total
$380 000
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The price paid for Cozzi's net assets is $500,000. The fixed assets have a fair value of $220,000, and the liabilities have
a fair value of $110,000. The amount of goodwill to be recorded in the purchase is
O $150,000
SO
O $170,000
O $190,000
Chapter 11 Solutions
Intermediate Accounting
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