Horngren's Financial & Managerial Accounting Plus Mylab Accounting With Pearson Etext -- Access Card Package (5th Edition) (miller-nobles Et Al., The Horngren Accounting Series)
5th Edition
ISBN: 9780134077345
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
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Question
Chapter 9, Problem 9.26E
1.
To determine
To Compute: thecost of the goodwill purchased by P Company.
2.
To determine
To record: the purchase of K Company by P Company.
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Students have asked these similar questions
Measuring and recording goodwill
Princeton has acquired several other companies. Assume that Princeton purchased Kelleher for $9,000,000 cash. The book value of Kelleher’s assets is $19,000,000 (market value, $20,000,000), and it has liabilities of $12,000,000 (market value, $12,000,000).
Requirements
Compute the cost of the good-will purchased by Princeton.
Record the purchase of Kelleher by Princeton.
has acquired several other companies. Assume that
Princess
purchased
Kittery
for
$7,000,000
cash. The book value of
Kittery's
assets is
$13,000,000
(market value,
$16,000,000),
and it has liabilities of
$12,000,000
(market value,
$12,000,000).
Requirements
1.
Compute the cost of goodwill purchased by
Princess.
2.
Record the purchase of
Kittery
by
Princess.
Requirement 1. Compute the cost of goodwill purchased by
Princess.
Compute the amount of acquired Goodwill, including contingent earnings and bargain purchase
Assume that you are charged with assigning fair values related to a $3,800,000 acquisition. You determine that the fair value of the net identifiable tangible assets is $1,850,000. You also conclude that the purchase included a Customer List with a fair value at $340,000.
a. How much Goodwill will you record in this acquisition?
$ 1,610,000 ✓
b. Continuing from part (a), now also assume that the purchase and sale agreement requires the payment of an additional $925,000 if the subsidiary achieves a certain level of earnings. You estimate the fair value of that contingent earnings clause in the agreement to be $220,000.
How does this additional information affect your computation of Goodwill?
The amount of Goodwill recorded is $
1,830,000
c. This part of the exercise is independent parts (a) and (b). Assume that the purchase price is $3,800,000 and that fair value of the net identifiable tangible…
Chapter 9 Solutions
Horngren's Financial & Managerial Accounting Plus Mylab Accounting With Pearson Etext -- Access Card Package (5th Edition) (miller-nobles Et Al., The Horngren Accounting Series)
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