FINANCIAL ACCOUNTING 9TH
16th Edition
ISBN: 9781308821672
Author: Libby
Publisher: MCG/CREATE
expand_more
expand_more
format_list_bulleted
Question
Chapter 8, Problem 8.9ME
To determine
Discuss whether the management of Company E should accept the offer of Incorporation G of $5,000,000.
To determine
Ascertain the amount of goodwill that Incorporation G should record on the date of the purchase, if Company E accepts the offer.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
kai.9
. The following information pertains to Best Food (BF) Company’s intangible assets:
a. On January 1, 2020, BF signed an agreement to operate as a franchisee of Macky’s Food Chain for an initial franchise fee of P1,500,000. Of this amount, P300,000 was paid when the agreement was signed and the balance is payable in 4 annual payments of P300,000 each, beginning January 1, 2021. The agreement provides that the down payment is not refundable and no future services are required of the franchisor. The present value at January 1, 2020 of the 4 annual payments discounted at 14% (the implicit rate for a loan of this type) is P874,000. The agreement also provides that 5% of the revenue from the franchise must be paid to the franchisor annually. BF’s revenue from the franchise for 2020was P19 million. BF estimates the useful life of the franchise to be 10 years.
b. BF incurred P1,300,000 of experimental and developmental costs in its laboratory to develop a patent which was granted on January 2,…
ABC Co. is acquiring XYZ Inc. XYZ has the following unrecorded intangible assets:
Patent on a product P10,000.
Customer list with an observable fair value of P50,000.
A 5-year operating lease with favorable terms with a discounted present value of P8,000.
Skilled workforce, P150,000
Identifiable R&D of P100,000
Advertising contracts, P12,000.
ABC will record how much for acquired Intangible Assets from the purchase of XYZ Inc.?
Chapter 8 Solutions
FINANCIAL ACCOUNTING 9TH
Ch. 8 - Define long-lived assets. Why are they considered...Ch. 8 - Prob. 2QCh. 8 - What are the classifications of long-lived assets?...Ch. 8 - Prob. 4QCh. 8 - Describe the relationship between the expense...Ch. 8 - Prob. 6QCh. 8 - Prob. 7QCh. 8 - In computing depreciation, three values must be...Ch. 8 - The estimated useful life and residual value of a...Ch. 8 - Prob. 10Q
Ch. 8 - Prob. 11QCh. 8 - Prob. 12QCh. 8 - Prob. 13QCh. 8 - Prob. 14QCh. 8 - Prob. 15QCh. 8 - Why is depreciation expense added to net income...Ch. 8 - Miga Company and Porter Company both bought a new...Ch. 8 - Leslie, Inc.. followed the practice of...Ch. 8 - Prob. 3MCQCh. 8 - Prob. 4MCQCh. 8 - Prob. 5MCQCh. 8 - Prob. 6MCQCh. 8 - Prob. 7MCQCh. 8 - Prob. 8MCQCh. 8 - Prob. 9MCQCh. 8 - (Chapter Supplement) Irish Industries purchased a...Ch. 8 - Prob. 8.1MECh. 8 - Prob. 8.2MECh. 8 - Prob. 8.3MECh. 8 - Prob. 8.4MECh. 8 - Computing Book Value (Double-Declining-Balance...Ch. 8 - Computing Book Value (Units-of-Production...Ch. 8 - Identifying Asset Impairment LO8-4 For each of the...Ch. 8 - Prob. 8.8MECh. 8 - Prob. 8.9MECh. 8 - Prob. 8.10MECh. 8 - Prob. 8.1ECh. 8 - Prob. 8.2ECh. 8 - Computing and Recording Cost and Depreciation of...Ch. 8 - Determining Financial Statement Effects of an...Ch. 8 - Determining Financial Statement Effects of an...Ch. 8 - Recording Depreciation and Repairs (Straight-Line...Ch. 8 - Prob. 8.7ECh. 8 - Prob. 8.8ECh. 8 - Computing Depreciation under Alternative Methods...Ch. 8 - Computing Depreciation under Alternative Methods...Ch. 8 - Prob. 8.11ECh. 8 - Prob. 8.12ECh. 8 - Prob. 8.13ECh. 8 - Computing Depreciation and Book Value for Two...Ch. 8 - Prob. 8.15ECh. 8 - Recording the Disposal of an Asset at Three...Ch. 8 - Prob. 8.17ECh. 8 - Prob. 8.18ECh. 8 - Prob. 8.19ECh. 8 - Prob. 8.20ECh. 8 - Prob. 8.21ECh. 8 - Prob. 8.22ECh. 8 - (Chapter Supplement) Recording a Change in...Ch. 8 - Prob. 8.24ECh. 8 - Prob. 8.25ECh. 8 - Explaining the Nature of a Long-Lived Asset and...Ch. 8 - Analyzing the Effects of Repairs, an Addition, and...Ch. 8 - Prob. 8.3PCh. 8 - Best Buy Co., Inc., headquartered in Richfield,...Ch. 8 - Evaluating the Effect of Alternative Depreciation...Ch. 8 - Recording and Interpreting the Disposal of Three...Ch. 8 - Prob. 8.7PCh. 8 - Prob. 8.8PCh. 8 - Computing Goodwill from the Purchase of a Business...Ch. 8 - Prob. 8.10PCh. 8 - Prob. 8.11PCh. 8 - Explaining the Nature of a Long-Lived Asset and...Ch. 8 - Prob. 8.2APCh. 8 - Computing the Acquisition Cost and Recording...Ch. 8 - Prob. 8.4APCh. 8 - Recording and Interpreting the Disposal of Three...Ch. 8 - Prob. 8.6APCh. 8 - Prob. 8.7APCh. 8 - Asset Acquisition, Depreciation, and Disposal Pool...Ch. 8 - Case A. Dr Pepper Snapple Croup, Inc., is a...Ch. 8 - Prob. 8.1BCOMPCh. 8 - Prob. 8.1CCOMPCh. 8 - Case D. Stewart Company reports the following...Ch. 8 - Case E. Matson Company purchased the following on...Ch. 8 - Prob. 8.1CPCh. 8 - Finding Financial Information LO8-1, 8-2, 8-6...Ch. 8 - Comparing Companies within an Industry Refer to...Ch. 8 - Prob. 8.4CPCh. 8 - Prob. 8.5CPCh. 8 - Prob. 8.6CPCh. 8 - Evaluating the Impact of Capitalized Interest on...
Knowledge Booster
Similar questions
- 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 Telecom account for this asset after acquiring SamsonSamson Wireless? Explain in detail.arrow_forwardTaste-T Company has been in business for 30 years and has developed a large group of loyal restaurant customers. Down Home Foods made an offer to buy Taste-T Company for $6,000,000. Themarket value of Taste-T’s tangible assets, net of liabilities, on the date of the offer is $5,600,000.Taste-T also holds a patent for a fluting machine that the company invented (the patent with a market value of $200,000 was never recorded by Taste-T because it was developed internally). Howmuch has Down Home Foods included for intangibles in its offer of $6,000,000? Assuming TasteT accepts this offer, which company will report Goodwill on its balance sheet and at what amount?arrow_forwardShow the solution in good accounting formarrow_forward
- 5 On December 31, 2024, the end of the fiscal year, California Microtech Corporation completed the sale of its semiconductor business for $15 million. The semiconductor business segment qualifies as a component of the entity according to GAAP. Consider the following additional information. 2 points eBook Print References The book value of the assets of the segment at the time of the sale was $12 million. The loss from operations of the segment during 2024 was $4.5 million. Pretax income from other continuing operations for the year totaled $6.6 million. . The income tax rate is 25%. . · ● Prepare the lower portion of the 2024 income statement beginning with income from continuing operations before income taxes. Note: Loss amounts should be indicated with a minus sign. Enter your answers in whole dollars and not in millions. For example, $4,000,000 rather than $4. CALIFORNIA MICROTECH CORPORATION Partial Income Statement For the Year Ended December 31, 2024 Income from continuing…arrow_forwardABC Co. is acquiring XYZ Inc. XYZ has the following intangible assets: Customer list with an observable fair value of $45,000 Identifiable research and development costs of $150,000 A 5-year operating lease with favorable terms having a discounted present value of $6,000. Patent on a product that is deemed to have no useful life $15,000. ABC will record how much for acquired Intangible Assets from the purchase of XYZ Inc?arrow_forwardRequired information [The following information applies to the questions displayed below] Case A. Kapono Farms exchanged an old tractor for a newer model. The old tractor had a book value of $20,500 (original cost of $45,000 less accumulated depreciation of $24,500) and a fair value of $10,700. Kapono paid $37,000 cash to complete the exchange. The exchange has commercial substance. Case B. Kapono Farms exchanged 100 acres of farmland for similar land. The farmland given had a book value of $585,000 and a fair value of $870,000. Kapono paid $67,000 cash to complete the exchange. The exchange has commercial substance. Required: 1. What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value of the new land? 2. Assume the fair value of the farmland given is $468,000 instead of $870,000. What is the amount of gain or loss that Kapono would recognize on the exchange? What is the initial value of the new land? 3. Assume the same facts as…arrow_forward
- Ac. 1arrow_forwardThe following transactions involving intangible assets of Blossom Corporation occurred on or near December 31, 2020. 1. Minton paid Grand Company $360,000 for the exclusive right to market a particular product, using the Grand name and logo in promotional material. The franchise runs for as long as Blossom is in business. 2. Blossom spent $540,000 developing a new manufacturing process. It has applied for a patent, and it believes that its application will be successful. 3. In January, 2021, Blossom's application for a patent (#2 above) was granted. Legal and registration costs incurred were $189,000. The patent runs for 20 years. The manufacturing process will be useful to Minton for 10 years. 4. Blossom incurred $144,000 in successfully defending one of its patents in an infringement suit. The patent expires during December, 2024. 5. Blossom incurred $432,000 in an unsuccessful patent defense. As a result of the adverse verdict, the patent, with a…arrow_forwardSolving. On January 1, 200A, ABC Company sells to XYZ, a used transportation equipment, which was acquired at P800,000, 5 years ago. The carrying value of the equipment is P500,000. There is no established selling price for the equipment. Upon executing the sale, ABC received P100,000 down payment and a 12% promissory note which gives the holder the right to collect 150,000 annually starting December 200A until December 200C, when the interest rate prevailing in the market is 13%. At the end of December 200A, the carrying value of the current portion of note receivable is (Round off the resulting present value of the note to the nearest hundreds.)arrow_forward
- Jeremiah Corporation has provided the following information on intangible assets as follows: a. A patent was purchased from Isaiah Company for P5,000,000 on January 1, 20x1. On the acquisition date, the patent was estimated to have a useful life of 10 years. The patent had a net book value of P5,000,000 when Isaiah sold it to Jeremiah. b. On February 2, 20x2, a franchise was purchased from Daniel Company for P2,160,000. The contract that runs for 20 years provides that 5%of revenue from the franchise must be paid to Daniel. Revenue from the franchise for 20x2 was P8,000,000. c. Jeremiah incurred the following research and development costs in 20x2: Materials and equipment P462,000 657,000 329,000 P1,448,000 Personnel Indirect costs Total Because of the recent events, Jeremiah, on January 1, 20x2, estimates that the remaining useful life of the patent purchased on January 1, 20x1, is only five (5) years from January 1, 20x2. 1. On December 31, 20x2, the carrying value of the patent…arrow_forwardJanes Company provided the following information on intangible assets: a. A patent was purchased from the Lou Company for $700,000 on January 1, 2022. Janes estimated the remaining useful life of the patent to be 10 years. The patent was carried on Lou's accounting records at a net book value of $350,000 when Lou sold it to Janes. b. During 2024, a franchise was purchased from the Rink Company for $500,000. The contractual life of the franchise is 10 years and Janes records a full year of amortization in the year of purchase. c. Janes incurred research and development costs in 2024 as follows: Materials and supplies Personnel Indirect costs Total $ 140,000 180,000 60,000 $ 380,000 d. Effective January 1, 2024, based on new events that have occurred, Janes estimates that the remaining life of the patent purchased from Lou is only five more years. Required: 1. Prepare the entries necessary for years 2022 through 2024 to reflect the above information. 2. Prepare a schedule showing the…arrow_forwardNeed some assistance in completing Problem 1 and Problem 2. Thank youarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning