Intermediate Accounting
1st Edition
ISBN: 9780132162302
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
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Textbook Question
Chapter 11, Problem 11.7P
Description | Debit | Credit |
Cash | $ 30,000 | |
Inventory | 100,000 | |
Property, plant, and equipment - Net | 370,000 | |
Current liabilities | $ 50,000 | |
Common stock - No oar | 150,000 | |
300,000 | ||
Totals | $500,000 | $500,000 |
Assume that MPL, Inc. offers to acquire Dark Horse at a purchase price of $650,000. A study of Dark Horse’s assets revealed that the inventory had a fair market value of $180,000 and the plant assets were undervalued by $50,000.
Required
- a. Given this set of assumptions, calculate the amount of goodwill or bargain purchase gain to be recorded on the acquisition.
- b. Assume new that MPL, Inc. offers to acquire Dark Horse at a purchase price of $250,000. Determine the amount of goodwill or bargain purchase gain.
- c. Indicate how to account for goodwill and any gain from a bargain purchase in the financial statements.
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Chapter 11 Solutions
Intermediate Accounting
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