Financial Accounting (12th Edition) (What's New in Accounting)
12th Edition
ISBN: 9780134725987
Author: C. William Thomas, Wendy M. Tietz, Walter T. Harrison Jr.
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 7, Problem 7.17S
1.
To determine
To Compute: The cost of the
2.
To determine
To Explain: The manner in which Incorporation M will account for goodwill in future years.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
handy snacks inc dominates the snack-food industry with its salty chip brand. assume that handy snacks inc purchased super snacks, Inc, for 5.2 million cash. the market value of super snacks assets is 9 million, and super snacks has liabilities with a market value of 7.1 million
1. compute the cost of the Goodwill purchased by handy snacks 2. explain how handy snacks will account for Goodwill in future years
Learning Objective 5: Measure and record goodwill) Munchies, Inc., dominates thesnack-food industry with its Salty Chip brand. Assume that Munchies purchased Sweet SnacksCompany for $5.4 million cash. The market value of Sweet Snacks’ assets is $10 million, andSweet Snacks has liabilities with a market value of $7.1 million.Requirements1. Compute the cost of the goodwill purchased by Munchies.2. Explain how Munchies will account for goodwill in future years.
(Learning Objectives 1, 4: Allocate costs to assets acquired in a lump-sumpurchase; dispose of a plant asset) Sugar Ridge Manufacturing bought three used machines ina $167,000 lump-sum purchase. An independent appraiser valued the machines as shown:Machine No. Appraised Value123$ 38,25073,10058,650What is each machine’s individual cost? Immediately after making this purchase, Sugar Ridgesold Machine No. 3 for its appraised value. What is the result of the sale? (Round decimals to threeplaces when calculating proportions, and use your computed percentages in all calculations.)
Chapter 7 Solutions
Financial Accounting (12th Edition) (What's New in Accounting)
Ch. 7 - Smatter Corporation purchased land for a new...Ch. 7 - Carlos Company purchased a building and land for...Ch. 7 - Whitmore Corporation purchased a new delivery van...Ch. 7 - When a company expenses the cost of maintenance...Ch. 7 - Prob. 5QCCh. 7 - Planter Company purchased a delivery van for...Ch. 7 - Bixby Corporation purchased a forklift for 40,000...Ch. 7 - On the first day of its fiscal year, Spearhead...Ch. 7 - The depreciation method that does not initially...Ch. 7 - Sokolsky Excavating purchased a used dump truck...
Ch. 7 - Barron Fuel purchased an oil well for 200,000. The...Ch. 7 - Prob. 12QCCh. 7 - Prob. 13QCCh. 7 - Prob. 14QCCh. 7 - Prob. 15QCCh. 7 - Prob. 16QCCh. 7 - Prob. 7.1ECCh. 7 - LO 1 (Learning Objective 1: Measure the cost and...Ch. 7 - LO 1 (Learning Objective 1: Measure and record the...Ch. 7 - Prob. 7.3SCh. 7 - Prob. 7.4SCh. 7 - LO 3 (Learning Objective 3: Compute depreciation...Ch. 7 - Prob. 7.6SCh. 7 - LO 3 (Learning Objective 3: Compute depreciation...Ch. 7 - LO3 (Learning Objective 3: Compute depreciation...Ch. 7 - LO 3 (Learning Objective 3: Compute depreciation...Ch. 7 - LO 3 (Learning Objective 3: Compute depreciation...Ch. 7 - LO 3 (Learning Objective 3: Compute depreciation...Ch. 7 - Prob. 7.12SCh. 7 - Prob. 7.13SCh. 7 - Prob. 7.14SCh. 7 - Prob. 7.15SCh. 7 - Prob. 7.16SCh. 7 - Prob. 7.17SCh. 7 - LO 6 (Learning Objective 6: Explain the effect of...Ch. 7 - Prob. 7.19SCh. 7 - LO 7 (Learning Objective 7: Calculate return on...Ch. 7 - Prob. 7.21SCh. 7 - Prob. 7.22AECh. 7 - Prob. 7.23AECh. 7 - LO 2 (Learning Objective 2: Distinguish capital...Ch. 7 - Prob. 7.25AECh. 7 - LO 3 (Learning Objective 3: Determine depreciation...Ch. 7 - LO 1,3,8 E7-27A, (Learning Objectives 1, 3, 8:...Ch. 7 - LO 3 (Learning Objective 3: Change a plant assets...Ch. 7 - LO 3, 4 (Learning Objectives 3, 4: Compute...Ch. 7 - Prob. 7.30AECh. 7 - LO 1, 3, 4 (Learning Objectives 1, 3, 4: Measure a...Ch. 7 - Prob. 7.32AECh. 7 - Prob. 7.33AECh. 7 - Prob. 7.34AECh. 7 - LO 7 (Learning Objective 7: Calculate return on...Ch. 7 - Prob. 7.36AECh. 7 - Prob. 7.37BECh. 7 - Prob. 7.38BECh. 7 - Prob. 7.39BECh. 7 - Prob. 7.40BECh. 7 - Prob. 7.41BECh. 7 - Prob. 7.42BECh. 7 - LO 3 (Learning Objective 3: Change a plant assets...Ch. 7 - LO 3.4 (Learning Objectives 3.4: Compute...Ch. 7 - Prob. 7.45BECh. 7 - Prob. 7.46BECh. 7 - Prob. 7.47BECh. 7 - Prob. 7.48BECh. 7 - Prob. 7.49BECh. 7 - Prob. 7.50BECh. 7 - Prob. 7.51BECh. 7 - Prob. 7.52QCh. 7 - Prob. 7.53QCh. 7 - Prob. 7.54QCh. 7 - Prob. 7.55QCh. 7 - Prob. 7.56QCh. 7 - Madison Corporation acquired a machine for 27,000...Ch. 7 - Prob. 7.58QCh. 7 - Prob. 7.59QCh. 7 - Prob. 7.60QCh. 7 - Prob. 7.61QCh. 7 - Prob. 7.62QCh. 7 - Prob. 7.63QCh. 7 - Prob. 7.64QCh. 7 - Prob. 7.65QCh. 7 - Prob. 7.66QCh. 7 - Prob. 7.67APCh. 7 - (Learning Objectives 1, 3: Measure and account for...Ch. 7 - (Learning Objectives 1, 3, 4: Measure and account...Ch. 7 - Prob. 7.70APCh. 7 - (Learning Objectives 1, 3, 4, 6, 8: An21yze plant...Ch. 7 - Prob. 7.72APCh. 7 - (Learning Objectives 1, 4, 8: Analyze the effect...Ch. 7 - Prob. 7.74APCh. 7 - (Learning Objectives 4, 8: Analyze the effect of a...Ch. 7 - Prob. 7.76BPCh. 7 - Prob. 7.77BPCh. 7 - Prob. 7.78BPCh. 7 - Prob. 7.79BPCh. 7 - Prob. 7.80BPCh. 7 - Prob. 7.81BPCh. 7 - (Learning Objectives 1, 4, 8: Analyze the effect...Ch. 7 - Prob. 7.83BPCh. 7 - Prob. 7.84BPCh. 7 - LO 3 (Learning Objective 3: Determine the effect...Ch. 7 - Prob. 7.86CEPCh. 7 - Prob. 7.87CEPCh. 7 - Prob. 7.88SCCh. 7 - Prob. 7.89DCCh. 7 - Prob. 7.90DCCh. 7 - Prob. 7.91EICCh. 7 - Prob. 1FFCh. 7 - Focus on Analysis Under Armour, Inc. LO 1, 3, 5,...
Knowledge Booster
Similar questions
- The balance sheet of Cattleman's Steakhouse shows assets of $86,400 and liabilities of $13,500. The fair value of the assets is $90,000 and the fair value of its liabilities is $13,500. Longhorn paid Cattleman's $82,820 to acquire all of its assets and liabilities. Longhorn should record goodwill on this purchase of: =6320? Please help me with solution I am confused in this and don't give image in answer thankuarrow_forwardJava Dreams shows assets of $86,400 and liabilities of $15,000. The fair value of the assets is $90,000 and the fair value of its liabilities is $15,000. One Mean Bean paid Java Dreams $95,000 to acquire all of its assets and liabilities. One Mean Bean should record goodwill on this purchase as: $20,000 $3,600 $5,000 $23,600arrow_forwardLaker Grind Coffee House, Inc. purchased Brian's Bakery, Inc. for $400,000. The fair market value of tangible assets received from Brian's Bakery is listed below. Building $200,000 Equipment $150,000 Furniture $50,000 Inventory $30,000 What amount of goodwill will Laker Grind Coffee House record in conjunction with this transaction? A $0 B $130,000 C) $500,000 D) $530,000arrow_forward
- Athena Paper Corporation acquired for cash 100% of the outstanding common stock of Georgia, Inc., a supplier of wood pulp. The $4,500,000 amount paid was significantly higher than the book value of Georgia’s net assets (assets less liabilities) of $2,800,000. The Athena controller recorded the difference of $1,700,000 as an asset, goodwill. Required: 1. Discuss the meaning of the term goodwill. 2. In what situation would the Athena controller be correct in her valuation of goodwill?arrow_forward21.Zhane Company exchanged a car from its inventory for a computer system to be used in its technological upgrading project. The following information relates to this exchange that took place on July 16, 2021.Listed selling price of the car-900,000FV of the computer system-860,000Carrying amount of the car-600,000If Zhane Company recognized a gain on this exchange of P160,000, how much was the amount paid to complete the transaction? a. 100,000 b. 260,000 c. 140,000 d. Cannot be determinedarrow_forwardIf the company's assets in TL: cash 100.000, accounts receivable 50.000, inventory 150.000, and building 200.000 (market value 300.000) and the liabilities 300.000. If the price paid to acquire company 400.000 TL, how much is the goodwill under market value approach? Select one: a. 100.000 b. 300.000 c. 200.000 d. 150.000arrow_forward
- Robinson Company purchased Franklin Company at a price of $2,500,000. The fair market value of thenet assets purchased equals $1,800,000. Robinson believes that its employees provide superior customer service, and through their efforts, Robinson believes it has created $900,000 of goodwill. Should Robinson Company record this goodwill?arrow_forwardABC is testing a store branch for impairment. The assets of thebranch include a building with a carrying amount of P4,000,000,equipment of P3,000,000, inventory of P2,000,000 and goodwill ofP500,000. The fair value less cost to dispose of the inventory is P2,500,000.The expected cashflows from the branch are: Year Amount1 P 2,000,0002 1,700,0003 1,500,0004 1,500,0005 1,300,000 The effective interest rate is 9%. The present value of the cashflowsbeyond year 5 is estimated to be at P400,000. 10. Value in use of the store branch11. Total Impairment Loss12. Carrying value of the building after impairment13. Carrying value of the inventory after impairment14. Carrying value of the goodwill after impairmentarrow_forward2-Assume that one of your clients asks for your assistance in allocating the $4,500,000 cost of a 100% acquisition of a competitor firm. You estimate the fair value of the net assets on the investee's balance sheet at $3,000,000. However, there is, in addition, an unrecorded trademark valued at $850,000. The intangible asset has an indefinite useful life. Required:a. What amount of goodwill will be recorded?b. What will be the effect of the goodwill and brand name on the annual income statement?c. Now assume that the agreement between the investor and investee calls for an additional payment of $500,000 contingent upon the investee reaching a certain level of income within three years. You estimate the fair value of the potential payment at $400,000. What effect, if any, does the potential payment have on the amount of goodwill recognized?arrow_forward
- E7-22A. (Learning Objective 1: Measure the cost of plant assets) Murphy Self Storagepurchased land, paying $160,000 cash as a down payment and signing a $185,000 note payablefor the balance. Murphy also had to pay delinquent property tax of $2,000, title insurance costing$6,000, and $11,000 to level the land and remove an unwanted building. The company paid$58,000 to add soil for the foundation and then constructed an office building at a cost of $700,000.It also paid $52,000 for a fence around the property, $11,000 for the company sign near theproperty entrance, and $3,000 for lighting of the grounds. What is the capitalized cost of eachof Murphy’s land, land improvements, and building?arrow_forwardE7-33A. (Learning Objectives 5, 6: Record intangibles, amortization, and impairment)Sweitzer Printers incurred external costs of $400,000 for a patent for a new laser printer.Although the patent gives legal protection for 20 years, it was expected to provide Sweitzerwith a competitive advantage for only ten years due to expected technological advances in theindustry. Sweitzer uses the straight-line method of amortization.After using the patent for five years, Sweitzer learned at an industry trade show that KaytownPrinters has patented a more efficient printer and will be selling this printer next quarter. Becauseof this new information, Sweitzer determined that the expected future cash flows from its patentwere now only $130,000. The fair value of Sweitzer’s patent on the open market was now zero.Requirements1. Write the journal entries to record (a) the purchase of the patent and (b) amortization for year 1.2. Once Sweitzer learned of the competing printer and adjusted the expected…arrow_forward1. ANEMONE Company engaged your services to compute the goodwill in the purchase of another company which provided the following: Net income Net assets 2018 P 2,000,000 P 7,800,000 2019 2,500,000 8,700,000 2020 3,900,000 9,000,000 Goodwill is measured by capitalizing excess earnings at 25% with normal on average net assets at 20% How much is the goodwill?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT
Individual Income Taxes
Accounting
ISBN:9780357109731
Author:Hoffman
Publisher:CENGAGE LEARNING - CONSIGNMENT