Advanced Accounting 14th Edition
14th Edition
ISBN: 9781260726442
Author: By Joe Ben Hoyle And Thomas Schaefer And Timothy Doupnik
Publisher: Mc Grawhill Education
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Question
Chapter 18, Problem 27P
To determine
Identify the correct option out of the given statements.
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AB is a private not-for-profit entity. It acquires YZ, another private not-for-profit entity. The acquisition value is $1 million. YZ has net assets with a book value of $600,000 but a fair value of $700,000. Officials for AB expect that YZ will be predominantly supported by contributions in the future. After the acquisition, what amount of goodwill will be reported on the combined balance sheet? Choose the correct.a. $–0–b. $100,000c. $300,000d. $400,000
Easter Company’s 12/31/2021 statement of financial position reports assets of $5,000,000 and liabilities of $2,000,000. All of Easter’s assets’ book values approximate their fair value, except for land, which has a fair value that is $300,000 greater than its book value. On 12/31/2021, Wendell Corporation paid $5,100,000 to acquire Easter.
Calculate the amount of goodwill Wendell should record as a result of this purchase.
ABC Corporation purchased XYZ Inc. The latter has the following account balances:
The noncurrent assets have a fair value of P4,500,000. ABC paid the owners of XYZ a total purchase price of P4,500,000. How much is the goodwill that ABC should record from this acquisition?
*refer to attached photo
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- Melton Devices acquires Beck, a small start-up company, by paying $2,170,900 in cash on January 2. Following are the book values and fair values of Beck on the date of acquisition. (Click the icon to view the book values and fair values.) Read the requirements. Requirement a. What is the amount of goodwill acquired? The amount of goodwill acquired Requirement b. What intangible assets are acquired? Which of the intangibles have an indefinite life? Which will be amortized? What will the amortization expense be in the year after acquisition? (If an input field is not used in the table leave the field empty, do not enter a zero) Intangible Asset Finite or Indefinite Life Amortization Amortized? Expense Trial Balance Beck Book Value Fair Value Cash $ 29,000 $ 29,000 Receivables 100,700 100,650 Manufacturing Equipment 640,350 654,500 Patents (remaining life 8 years) 60,600 684,000 Trademarks 14,650 187,500 Payables 58,904 58,904 Print Donearrow_forwardBryer Co. purchases all of the assets and liabilities of Stellar Co. for $1,500,000. The fair value of Stellar’s assets is $2,000,000, and its liabilities have a fair value of $1,200,000. The book value of Stellar’s assets and liabilities are not known. For what amount would Bryer record goodwill associated with the purchase? a. $800,000.b. $500,000.c. $700,000.d. $0.arrow_forwardOn September 1, 2020, Flint Corporation acquired Tamarisk Enterprises for a cash payment of $710,000. At the time of purchase, Tamarisk's balance sheet showed assets of $560,000, liabilities of $240,000, and owners' equity of $320,00O. The fair value of Tamarisk's assets is estimated to be $790,000. Compute the amount of goodwill acquired by Flint. Value assigned to goodwill $arrow_forward
- On September 1, 2019, Winans Corporation acquired Aumont Enterprises for a cash payment of £800,000. At the time of purchase, Aumont’s statement of financial position showed assets of £600,000, liabilities of £200,000, and equity of £400,000. The fair value of Aumont’s assets is estimated to be £800,000. Compute the amount of goodwill acquired by Winans.arrow_forwardSouthwest is a private not-for-profit entity. It acquires Northeast, another private not-for-profit. The acquisition value is $980,000. Northeast has two assets (and no liabilities): equipment with a net book value of $120,000 but a fair value of $150,000 and a building with a net book value of $500,000 but a fair value of $800,000. Northeast expects to receive some support through donations and contributions. However, it is not expected to be predominantly supported by contributions and investment income. After the combination, what should be reported for goodwill? $–0– $30,000 $60,000 $360,000arrow_forwardSouthwest is a private not-for-profit entity. It acquires Northeast, another private not-for-profit. The acquisition value is $980,000. Northeast has two assets (and no liabilities): equipment with a net book value of $120,000 but a fair value of $150,000 and a building with a net book value of $500,000 but a fair value of $800,000. Northeast expects to receive some support through donations and contributions. However, it is not expected to be predominantly supported by contributions and investment income. After the combination, what should be reported for goodwill? Choose the correct.a. $–0–b. $30,000c. $60,000d. $360,000arrow_forward
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