Advanced Accounting
14th Edition
ISBN: 9781260247824
Author: Joe Ben Hoyle, Thomas F. Schaefer, Timothy S. Doupnik
Publisher: RENT MCG
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Students have asked these similar questions
Melton Devices acquires Beck, a small start-up company, by paying $2,170,900 in cash on January 2. Following are the book values and fair values of Beck on the date of acquisition.
(Click the icon to view the book values and fair values.)
Read the requirements.
Requirement a. What is the amount of goodwill acquired?
The amount of goodwill acquired
Requirement b. What intangible assets are acquired? Which of the intangibles have an indefinite life? Which will be amortized? What will the amortization expense be in the year after acquisition? (If an input field
is not used in the table leave the field empty, do not enter a zero)
Intangible
Asset
Finite or
Indefinite Life
Amortization
Amortized?
Expense
Trial Balance
Beck
Book Value
Fair Value
Cash
$
29,000 $
29,000
Receivables
100,700
100,650
Manufacturing Equipment
640,350
654,500
Patents (remaining life 8 years)
60,600
684,000
Trademarks
14,650
187,500
Payables
58,904
58,904
Print
Done
Samtech Manufacturing purchased land and a building for $4 million. In addition to the purchase price, Samtech made
the following expenditures in connection with the purchase of the land and building:
Title insurance
Legal fees for drawing the contract
Pro-rated property taxes for the period after
acquisition
State transfer fees
An independent appraisal estimated the fair values of the land and building, if purchased separately, at $3.2 and $1.8
million, respectively. Shortly after acquisition, Samtech spent $92,000 to construct a parking lot and $50,000 for
landscaping.
Required:
1. Determine the initial valuation of each asset Samtech acquired in these transactions.
2. Determine the initial valuation of each asset, assuming that immediately after acquisition, Samtech demolished the
building. Demolition costs were $350,000 and the salvaged materials were sold for $6,000. In addition, Samtech
spent $89,000 clearing and grading the land in preparation for the construction of a new…
Carver Inc. purchased a building and the land on which the building is situated for a total cost of $922,800 cash. The land was appraised at $244,081 and the building at $817,139.
What is the accounting term for this type of acquisition?
Determine the amount of the purchase cost to allocate to the land and the amount to allocate to the building.
Would the company recognize a gain on the purchase?
Record the purchase in a horizontal statements model.
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