Explanation Acquisition is a corporate term used to represent purchase of another company and gaining the ownership of the company. Identify the acquirer: for acquisition it is very important for acquiree’s to know the acquirer. Following things should be kept in mind voting rights, large minority interest, governing body of combined entity and terms of exchange. Determine the acquisition date of the company. Measures the fair value of acquiree: the fair value of the aquiree as an entity is assumed to be paid by the acquirer. The price includes the contingent consideration, the costs of acquisition are not included in the price of the company acquired and expended. Record acquiree’s assets and liabilities that are assumed: the fair value of all identifiable assets and liabilities of the acquire are determined and recorded...

12th Edition

ISBN: 9781337046251

Author: FISCHER

Publisher: CENGAGE C

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Question

Chapter 1, Problem 8.3E

To determine

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

To provide: Contingent Consideration

Expert Solution & Answer

Chapter 1 Solutions

ADVANCED ACCOUNTING CHAPTERS 15-19

Ch. 1 - Prob. 1UTI Ch. 1 - Prob. 3UTI Ch. 1 - Prob. 4UTI Ch. 1 - Prob. 5UTI Ch. 1 - Prob. 6UTI Ch. 1 - Prob. 7UTI Ch. 1 - Prob. 8UTI Ch. 1 - Prob. 9UTI Ch. 1 - Prob. 10UTI Ch. 1 - Prob. 1.1E

Ch. 1 - Prob. 1.2E Ch. 1 - Prob. 1.3E Ch. 1 - Prob. 2E Ch. 1 - Prob. 5.1E Ch. 1 - Prob. 5.2E Ch. 1 - Prob. 6E Ch. 1 - Lake craft Company has the following balance...Ch. 1 - Prob. 8.2E Ch. 1 - Prob. 8.3E Ch. 1 - Prob. 9.1E Ch. 1 - Prob. 9.2E Ch. 1 - Prob. 1A.1.1AE Ch. 1 - Prob. 1A.1.2AE Ch. 1 - Prob. 1.2P Ch. 1 - Prob. 1.3.1P Ch. 1 - Prob. 1.4P Ch. 1 - Jack Company is a Corporation that was organized...Ch. 1 - Prob. 1.6P Ch. 1 - Prob. 1.7.1P Ch. 1 - Prob. 1.7.2P Ch. 1 - Prob. 1.8P Ch. 1 - Prob. 1.10.A1P Ch. 1 - Prob. 1.11P Ch. 1 - Prob. 1.12P Ch. 1 - Prob. 1.13.2P Ch. 1 - Prob. 1A.1.1AP Ch. 1 - Prob. 1A.1.2AP Ch. 1 - (Note: The use 01 a financial calculator or Excel...Ch. 1 - Frontier does not have publicly traded stock. You...Ch. 1 - Frontier does not have publicly traded stock. You...Ch. 1 - Prob. 1.1B.3C Ch. 1 - Prob. 1.1CC Ch. 1 - Prob. 1.2.1C Ch. 1 - Prob. 1.2.2C Ch. 1 - Case 1-2 Disney Acquires Marvel Entertainment On...

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Parilo Company acquired 170,000 of Makofske Co., 5% bonds on May 1, 2016, at their face amount. Interest is paid semiannually on May 1 and November 1. On November 1, 2016, Parilo Company sold 50,000 of the bonds for 96. Journalize entries to record the following: a. The initial acquisition of the bonds on May 1. b. The semiannual interest received on November 1. c. The sale of the bonds on November 1. d. The accrual of 1,000 interest on December 31, 2016.
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.
Hamilton Companys balance sheet on January 1, 2019, was as follows: Korbel Company is considering purchasing Hamilton (a privately held company) and discovers the following about Hamilton: a. No allowance for doubtful accounts has been established. A 10,000 allowance is considered appropriate. b. Marketable securities are valued at cost. The current market value is 60,000. c. The LIFO inventory method is used. The FIFO inventory of 140,000 would be used if the company is acquired. d. Land, included in property, plant, and equipment, which is recorded at its cost of 50,000, is worth 120,000. The remaining property, plant, and equipment is worth 10% more than its depreciated cost. e. The company has an unrecorded trademark that is worth 70,000. f. The companys bonds are currently trading for 130,000. g. The pension liability is understated by 40,000. Required: 1. Compute the amount of goodwill if Korbel agrees to pay 500,000 cash for Hamilton. 2. Next Level What are the reasons that the book value of Hamiltons net identifiable assets differ from their market value? 3. Prepare the journal entry to record the acquisition on the books of Korbel assuming Hamilton is liquidated. 4. If Korbel agrees to pay only 400,000 cash, how much goodwill exists? 5. If Korbel pays only 400,000 cash, prepare the journal entry to record the acquisition on its books, assuming Hamilton is liquidated.

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