Compute the consideration transferred in excess of book value acquired at January 1, 2020.
Compute the consideration transferred in excess of book value acquired at January 1, 2020.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter13: Investments And Long-term Receivables
Section: Chapter Questions
Problem 14RE
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Question
Multiple Choice
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a. $900.
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b. $1,400.
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c. $1,900.
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d. $2,400.
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e. $2,600.
Transcribed Image Text:Fair
Value
$1,200
1,350
1,300
Long-term liabilities 1,750
Buildings
Equipment
Land
Any excess of consideration transferred over fair value of net assets acquired is considered goodwill with an indefinite life.
Compute the consideration transferred in excess of book value acquired at January 1, 2020.
Multiple Choice
$900.
$1,400.
$1,900.
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Transcribed Image Text:Jackson Company acquires 100% of the stock of Clark Corporation on January 1, 2020, for $4,100 cash. As of that date Clark has the following trial
balance:
Cash
Accounts receivable
Inventory
Buildings (net) (5 year life)
Equipment (net) (2 year life)
Land
Accounts payable
Long-term liabilities (due
12/31/22)
Common stock
Additional paid-in capital
Retained earnings
Total
2020 2021
$140
50
Debit
$ 500
600
900
Net income $120
Dividends
40
1,600
1,000
900
$5,500
Credit
Net income and dividends reported by Clark for 2020 and 2021 follow:
400
1,900
1,000
700
1,500
$5,500
The fair value of Clark's net assets that differ from their book values are listed below:
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