Advanced Accounting
Advanced Accounting
12th Edition
ISBN: 9781305084858
Author: Paul M. Fischer, William J. Tayler, Rita H. Cheng
Publisher: Cengage Learning
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Chapter 1, Problem 6UTI

a.

To determine

Introduction: Acquisition is a corporate term used to represent purchase of another company and gaining the ownership of the company.

To provide: Value of Assets, Goodwill/Gain

b.

To determine

Introduction: Acquisition is a corporate term used to represent purchase of another company and gaining the ownership of the company.

To provide: Value of Assets, Goodwill/Gain

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Panther Company is acquiring the net assets of Sharon Company. The book and fair values of Sharon’s accounts are as follows: Accounts                                                            Book          FairCurrent Assets . . . . . . . . . . . . . . . . . . . . .  . . . . . . . . . . . $100,000        $120,000Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  . . . . . . . . . . . 50,000               80,000Building and Equipment . . . . . . . . . . . . . . . . . . . . . . . 300,000            400,000Customer List . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         0                    20,000Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .100,000             100,000What values will be assigned to current assets, land, building and equipment, the customer list, liabilities, goodwill, and gain under each of the following acquisition price scenarios?a. $800,000b. $450,000
Reck Company is considering the acquisition of Clock Inc.  To assess the amount it might     be   willing to pay, Reck makes the following computations and assumptions.A.  Clock, Inc. has identifiable assets with a total fair value of OMR 9,000,000 and liabilities of OMR 6,500,000.  The assets include office equipment with a fair value approximating book value, buildings with a fair value 30% higher than book value, and land with a fair value 50% higher than book value.  The remaining lives of the assets are deemed to be approximately equal to those used by Clock Inc.B.  Clock Inc.'s pretax incomes for the years 2018 through 2020 were OMR 580,000, OMR 420,000, and OMR 350,000, respectively.  Reck believes that an average of these earnings represents a fair estimate of annual earnings for the indefinite future.  However, it may need to consider adjustments for the following items included in pretax earnings:Depreciation on Buildings (each year)           380,000Depreciation on Equipment…
Assume El Dorado Inc. buys a competitor’s assets for $900,000. Of the $900,000 acquisition price, $600,000 is allocated to Section 197 Intangible Assets as follows: Customer Lists $60,000 Trade Name $90,000 Non-Compete Covenant 80,000 Patent $120,000 Goodwill $250,000 What is El Dorado’s accumulated amortization and remaining basis in each of its Section 197 Intangibles after 3 years? Use a table to present your answer.
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