Answered: Horan Ltd purchases the Coolum Store…

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter12: Auditing Long-lived Assets And Merger And Acquisition Activity

Section: Chapter Questions

Problem 37RQSC

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Question

Horan Ltd purchases the Coolum Store for the consideration of:

Cash $250,000

Land Horan Ltd is going to transfer the title of some land to the owners of the Coolum Store (the carrying amount of the land is $120 000; fair value is $295,000).

The statement of financial position of the Coolum Store as at the date of acquisition shows assets of $290,000 and liabilities of $95,000. All assets are fairly valued except the Coolum Store's building, which is in the financial statements at $60,000 but has a fair value of $85,000. There are no contingent liabilities.

Required

Calculate the amount of goodwill?

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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