Company S has no long-term marketable securities. Assume the following scenarios: Case A Assume that P Company paid $128,640 cash for 100% of the net assets of S Company. S COMPANY Assets Current Assets Long-lived Assets Liabilities Net Assets Book Value $13,850 $87,400 $18,520 $82,730 Fair Value 19,030 118,200 29,860 107,370 Case B Assume that P Company paid $112,410 cash for 100% of the net assets of S Company. S COMPANY Assets Current Assets Long-lived Assets Liabilities Net Assets Book Value $13,850 $87,400 $18,520 $82,730 Fair Value 29,490 84,700 20,640 93,550 Case C Assume that P Company paid $15,750 cash for 100% of the net assets of S Company. S COMPANY Assets Current Assets Long-lived Assets Liabilities Net Assets Book Value $13,850 $87,400 $18,520 $82,730 Fair Value 19,440 39,110 37,280 21,270 Complete the following schedule by listing the amount that would be recorded on P’s books. Assets Retained Earnings Goodwill Current Assets Long-lived Assets Liabilities (Gain) Case A $ $ $ $ $ Case B Case C

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter13: Marketable Securities And Derivatives

Section: Chapter Questions

Problem 15E

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Company S has no long-term marketable securities. Assume the following scenarios:

Case A
Assume that P Company paid $128,640 cash for 100% of the net assets of S Company.

S COMPANY
*Assets*
	Current Assets	Long-lived Assets	Liabilities	Net Assets
Book Value	$13,850	$87,400	$18,520	$82,730
Fair Value	19,030	118,200	29,860	107,370

Case B
Assume that P Company paid $112,410 cash for 100% of the net assets of S Company.

S COMPANY
*Assets*
	Current Assets	Long-lived Assets	Liabilities	Net Assets
Book Value	$13,850	$87,400	$18,520	$82,730
Fair Value	29,490	84,700	20,640	93,550

Case C
Assume that P Company paid $15,750 cash for 100% of the net assets of S Company.

S COMPANY
*Assets*
	Current Assets	Long-lived Assets	Liabilities	Net Assets
Book Value	$13,850	$87,400	$18,520	$82,730
Fair Value	19,440	39,110	37,280	21,270

Complete the following schedule by listing the amount that would be recorded on P’s books.

		Assets			Retained Earnings
	Goodwill	Current Assets	Long-lived Assets	Liabilities	(Gain)
Case A	$	$	$	$	$
Case B
Case C

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