Intermediate Accounting (2nd Edition)
2nd Edition
ISBN: 9780134730370
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
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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 (2nd Edition)
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