s.p.1-2 Straight Problem 1: Consideration Transferred and Goodwill ComputationBalance sheet information for Amor Corporation atJanuary 1, 2015 is summarized as follows:P 1,200,000800,000720,000Current assetsP920,000LiabilitiesPlant asset1,800,000Capital stock P10 parRetained earningsAmor s assets and liabilities are fairly valued except for plant assets that are undervalued byP200.000. On January 2, 2015 EduardoCorporation issues 80,000 shares of its P10 par valueordinary shares for all of Amor's net assets and Amor is dissolved. Market Quotations for thetwo stocks on this date are:Eduardo ordinary:Amor ordinary:P28P19Edwardo pays the following fees and costs in connection with the combination:Finder s fee, P10,000 (Direct Cost)Costs of registering and issuing stock, P5,000Legal and accounting fees, P6,000 (Indirect Cost)Required:teatcutate the amount ofconsideration transferred:2. Calculate any goodwill from the business combination.

Goodwill refers to the amount that is paid as a purchase consideration in the process of the…

Answered: Straight Problem 1: Consideration…

Principles of Accounting Volume 1

19th Edition

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Chapter11: Long-term Assets

Section: Chapter Questions

Problem 11PB: On May 1, 2015, Zoe Inc. purchased Branta Corp. for $15,000,000 in cash. They only received...

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On May 1, 2015, Zoe Inc. purchased Branta Corp. for $15,000,000 in cash. They only received $12,000,000 in net assets. In 2016, the market value of the goodwill obtained from Branta Corp. was valued at $4,000,000, but in 2017 it dropped to $2,000,000. Prepare the journal entry for the creation of goodwill and the entry to record any impairments to it in subsequent years.
Topic: Intangible Assets (Goodwill) England Company assembled the following data relative to a certain entity in determining the amount to be paid for net assets and goodwill: Assets at fair value before goodwill 2,600,000 Liabilities 900,000 Shareholders' Equity 1,700,000 Net Earnings after elimination of unusual or infrequent items: 2017 200,000 2018 230,000 2019 300,000 2020 250,000 2021 270,000 Required: Calculate the amount of goodwill under the following: 1. Average earnings are capitalized at 10%. 2. A return of 8% is considered normal on net assets at fair value. Excess earnings are capitalized at 15%. 3. A return of 10% is considered normal on net assets at fair value. Goodwill is measured at 5 years excess earnings. 4. A return of 10% is considered…
Accounting Answer asap Group Ccc-Three Ltd has identified its non-current assets consist of three classes: goodwill, land and plant. Details of items included in each class appear below. Goodwill Total goodwill is $580,000 and no impairments have previously been recorded. $300,000 of this total relates to the purchase of Company F on 1 February 2020. The estimated fair value of this goodwill at 30 June 2021 is $350,000. The remaining $280,000 of the total goodwill relates to the purchase of Company G on 1 January 2021. The estimated recoverable amount of this goodwill at 30 June 2021 is $250,000. Land The land was acquired on 1 June 2016 for $2,100,000. The estimated market value of the land at 30 June 2021 is $2,600,000. However, if the land was sold, disposal costs of $90,000 would be incurred. Plant The plant was originally acquired for $270,000 on 1 September 2017. When purchased, the plant was considered to have a nil residual value and a 10-year useful life for both accounting…
Naughty Company assembles the following data relative to a certain entity in determining the amount to be paid for net assets and goodwill: Assets at fair value before goodwill 2, 600, 000Liabilities 900, 000Shareholders’ equity 1, 700, 000 Net earnings after elimination of unusual or infrequent items:2008 200, 0002009 230, 0002010 300, 0002011 250, 0002012 270, 000 Required:Calculate the amount of goodwill under the following:1. Average earnings are capitalized at 10%2. A return of 8% is considered normal on net assets at fair value. Excess earnings are capitalized at 15%.3. A return of 10% is considered normal on net assets at fair value. Goodwill is measured at 5 years excess earnings.4. A return of 10% is considered normal on net assets at fair value. Excess earnings are expected to…
1. ANEMONE Company engaged your services to compute the goodwill in the purchase of another company which provided the following: Net income Net assets 2018 P 2,000,000 P 7,800,000 2019 2,500,000 8,700,000 2020 3,900,000 9,000,000 Goodwill is measured by capitalizing excess earnings at 25% with normal on average net assets at 20% How much is the goodwill?
Arlene Company accounted for noncurrent assets using the cost model. On October 30, 2017, the entity classified a noncurrent asset as held for sale. At that date, the carrying amount was P1,500,000, the fair value was estimated at P1,100,000 and the cost of disposal at P150,000. On November 20, 2017, the asset was sold for net proceeds of P800.000. 1. Prepare necessary journal entries
Lopez Company accounts for non-current assets using the cost model. On October 30, 2016 Lopez classified a non-current asset as held for sale in accordance with PFRS5. At that date the asset’s carrying amount was P15,000,000, its fair value was estimated at P11,000,000 and the costs to sell at P1,500,000. On November 20, 2016 the asset was sold for net proceeds of P9,200,000. In accordance with PFRS5, what amount should be included as a loss on disposal in Lopez’s statement of comprehensive income for the year ended December 31, 2016?
Given all the data, in the books of Kingdom Co. this transaction resulted in: a. Goodwill recorded at P1,324,200b. Goodwill recorded at P704,400c. Current Assets increased by P704,400d. Retained Earnings increased by P704,400
Group Ccc-Three Ltd has identified its non-current assets consist of three classes: goodwill, land and plant.Details of items included in each class appear below.GoodwillTotal goodwill is $580,000 and no impairments have previously been recorded.$300,000 of this total relates to the purchase of Company F on 1 February 2020. The estimated fair valueof this goodwill at 30 June 2021 is $350,000.The remaining $280,000 of the total goodwill relates to the purchase of Company G on 1 January 2021.The estimated recoverable amount of this goodwill at 30 June 2021 is $250,000.LandLand was acquired on 1 June 2016 for $2,100,000. The estimated market value of the land at 30 June2021 is $2,600,000. However, if the land was sold, disposal costs of $90,000 would be incurred.PlantPlant was originally acquired for $270,000 on 1 September 2017. When purchased, the plant wasconsidered to have a nil residual value and a 10 year useful life for both accounting and tax purposes.The estimated market value of…
Dr.Cr.(GH₵)(GH₵)Stated capital310Income surplus at 1 January 2017456Inventory at 1 January 2017236Turnover1,468Purchases856Salaries46Directors salaries (admin expense)116Land & building at cost550Plant & equipment at cost578Land & building- accumulated depreciation as at 1 January 2017154Plant & equipment –accumulated depreciation as at 1 January 2017266Bank interest received6Sundry expenses56Trade receivables110Trade payables122Accruals42Cash at bank43Dividends paid36Administrative expenses183Interest paid142,8242,824The following information is also relevant:(1) Inventory at 31st December 2017 is GH₵256(2) The tax liability for the year is estimated to be 20% of the profit before tax.4(3) The original cost of land and buildings is made up of GH₵100 land and GH₵450 buildings. Buildings are used in administration and depreciation is charged on a straight line basis over the estimated useful life of 50 years.(4) Plant & equipment are used in distribution and…
Arlene Company accounted for noncurrent assets using the cost model. On October 30, 2017, the entity classified a noncurrent asset as held for sale. At that date, the carrying amount was P1,500,000, the fair value was estimated at P1,100,000 and the cost of disposal at P150,000. On November 20, 2017, the asset was sold for net proceeds of P800.000. 1. What amount should be included as loss on disposal in the statement of comprehensive income for the year ended December 31, 2017? 2. Prepare necessary journal entries
Noncurrent Asset Held for Sale The statement of financial position of an entity on December 31, 20x1 shows the following information: Cash and cash equivalents 600,000 Trade and other receivables 1,200,000 Inventories 3,600,000 Investment property (Cost model) 1,400,000 Investment in associate 800,000 Property, plant and equipment 5,000,000 Total assets 12,600,000 Trade and other payables 4,900,000 Current tax payable 1,800,000 Deferred tax liability 700,000 Ordinary share capital 2,000,000 Retained earnings 2,700,000 Other components of equity 500,000 Total liabilities & equity 12,600,000 On December 31, 20x1, the entity commits to a plan to sell the investment property. All conditions of PFRS 5 are met. The fair value of the investment property on this date is P1,600,000 while the estimate of costs to sell is P50,000. Requirement: Prepare the classified statement of financial position of the entity as at December 31, 20x1.

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