6. A company purchases assets from another company for $10,000,000 in cash. The fair value of...
6. A company purchases assets from another company for $10,000,000 in cash. The fair value of the tangible assets is $7,000,000. Required: Prepare the journal entry to record the acquisition on the books of the acquirer, assuming: a. The acquisition qualifies for acquisition accounting. b. The acquisition does not qualify for acquisition accounting.
Homework Answers
| A company purchase assets from anothr company | ||||
| in cash $ | 10,000,000 | |||
| The fair value of the tangible Assets $ | 7,000,000 | |||
| Situation when the acquisition qualifies for Acquisition accounting | ||||
| So in this case we need to dertermined "Goodwill " | ||||
| Price paid for acquistiion $ | 10,000,000 | a | ||
| Fair value of Tangible asset $ | 7,000,000 | b | ||
| Goodwill'$ | 3,000,000 | (a-b) | ||
| There for Acquire books should show above Goodwil amount | ||||
| Journal Entry | ||||
| Details | Debit($) | Credit($) | ||
| Asset | 7,000,000 | |||
| Goodwill | 3,000,000 | |||
| Cash | 10,000,000 | |||
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6. A company purchases assets from another company for
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