Explanation Assets Fair Value $ Liabilities Fair Value $ Accounts Receivable 20,000 Current Liabilities 40,000 Inventory 60,000 Bonds Payable 100,000 Land 80,000 Building 320,000 Copyrights 50,000 Equipment 60,000 Total Fair Value of Assets 590,000 Total Fair Value of Liabilities 140,000 Fair Value of Net Assets (except goodwill) = Fair Value of Assets - Fair Value of Liabilities Fair Value of Net Assets (except goodwill) = $590,000 - $140,000 Fair Value of Net Assets (except goodwill) = $450,000 Value Analysis Company Implied FV Parent Price (100%) NCI Value (0%) Company Fair Value $500,000 $500,000 N/A Fair Value of Net Assets (except goodwill) $450,000 $450,000 Goodwill $50,000 $50,000 Gain on Acquisition N/A N/A Determination and Distribution of Excess Schedule Company Implied FV Parent Price (100%) NCI Value (0%) Company Fair Val

12th Edition

ISBN: 9781305084858

Author: Paul M. Fischer, William J. Tayler, Rita H. Cheng

Publisher: Cengage Learning

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Question

Chapter 2, Problem 2.8.1P

To determine

Introduction:

Value Analysis Schedule compare the fair value of net assets of the firm and the price paid for it which is further utilized to determine Goodwill or Gain on Acquisition.

Determination and Distribution of Excess Schedule compare the book value and fair value of all the subsidiary. It also shows the adjustments made in each subsidiary account.

To prepare: Value Analysis as well as Determination and distribution of excess schedule.

Expert Solution & Answer

Chapter 2 Solutions

Advanced Accounting

Ch. 2 - Prob. 1UTI Ch. 2 - Prob. 2UTI Ch. 2 - Prob. 3UTI Ch. 2 - Prob. 4UTI Ch. 2 - Prob. 5UTI Ch. 2 - Prob. 6UTI Ch. 2 - Santos Corporation is considering investing in...Ch. 2 - Prob. 2.1E Ch. 2 - Prob. 2.2E Ch. 2 - Prob. 3.1E

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Similar questions

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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