Intermediate Accounting
1st Edition
ISBN: 9780132162302
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
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Textbook Question
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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Students have asked these similar questions
Cozzi Company is being purchased and has the following balance sheet as of the purchase date:
Current assets
$200,000
Liabilities
$ 90,000
Fixed assets
180,000
Equity
290,000
Total
$380,000
Total
$380,000
The price paid for Cozzi's net assets is $500,000. The fixed assets have a fair value of $220,000, and the liabilities have a fair value of $110,000. The amount of goodwill to be recorded in the purchase is:
Select one:
a.$150,000
b.$0
c.$190,000
d.$170,000
Heartland Telecom provides communication services in Iowa, Nebraska, the Dakotas, and Montana. Heartland Telecom purchased goodwill as part of the acquisition of Samson Wireless Enterprises, which had the following figures:
Data table:
Book value of assets
$800,000
Market value of assets
900,000
Market value of liabilities
510,000
Requirements:
1.
Journalize the entry to record Heartland Telecom's purchase of SamsonSamson Wireless for $400,000cash plus a $600,000 note payable.
2.
What special asset does
Heartland Telecom'sHeartland Telecom's
acquisition of
SamsonSamson
Wirelessidentify? How should
HeartlandHeartland
Telecom account for this asset after acquiring
SamsonSamson
Wireless? Explain in detail.
Cozzi Company is being purchased and has the following balance sheet as of the purchase date:
$ 90,000
290,000
$380,000
Current assets
$200,000
Liabilities
Fixed assets
180,000
Equity
Total
$380 000
Total
The price paid for Cozzi's net assets is $500,000. The fixed assets have a fair value of $220,000, and the liabilities have
a fair value of $110,000. The amount of goodwill to be recorded in the purchase is
O $150,000
SO
O $170,000
O $190,000
Chapter 11 Solutions
Intermediate Accounting
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