|
Book Value Dr (Cr) |
Fair Value Dr (Cr) |
|
|
Current assets |
$ 500,000 |
$ 700,000 |
|
Land, buildings and equipment (net) |
2,000,000 |
3,500,000 |
|
Liabilities |
(600,000) |
(550,000) |
|
Capital stock |
(500,000) |
|
|
Retained earnings |
(1,400,000) |
In addition, Springfield Company has unrecorded identifiable
intangible assets, in the form of brand names and lease agreements,
with a total estimated fair value of $400,000.
In eliminating entry (R) on the consolidation working paper, the
debit to goodwill is:
| A. |
$ 950,000 |
|
| B. |
$ 450,000 |
|
| C. |
$1,150,000 |
|
| D. |
$ 50,000 |
| Fair Value | |||
| Dr (Cr) | |||
| Current assets | $700,000 | ||
| Land, buildings and equipment (net) | $3,500,000 | ||
| Identifiable intangible assets | $400,000 | ||
| Liabilities | -$550,000 | ||
| Identifiable NET assets | $4,050,000 | ||
| Purchase consideration | $5,000,000 | ||
| Goodwill | $950,000 | (5,000,000-4,050,000) | |
| hence, Option A is correct. | |||
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Precision Company acquires all of Springfield Company's voting stock for $5,000,000 in cash. Information on Springfield's...
Precision Company acquires all of Springfield Company's voting stock for $5,000,000 in cash. Information on Springfield's assets and liabilities at the date of acquisition is as follows: Book Value Dr (Cr) Fair Value Dr (Cr) Current assets $ 500,000 $ 700,000 Land, buildings and equipment (net) 2,000,000 3,500,000 Liabilities (600,000) (550,000) Capital stock (500,000) Retained earnings (1,400,000) In addition, Springfield Company has unrecorded identifiable intangible assets, in the form of brand names and lease agreements, with a total estimated fair...
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