Richard Cook purchased a company with assets of $500,000 and liabilities of $400,000. He paid $150,000...

Question

Question

Richard Cook purchased a company with assets of $500,000 and liabilities of $400,000. He paid $150,000...

Richard Cook purchased a company with assets of $500,000 and liabilities of $400,000. He paid $150,000 for the company. The amount of goodwill to be recorded is:

Select one:

a. $50,000

b. $500,000

c. $100,000

d. $350,000

business accounting

Add a comment Improve this question Transcribed image text

Answer 1

Answer #1

Goodwill = Purchase price + liabilities - assets

= $150000 + 400000 - 500000

= $50000

Option a. is correct answer.

Add a comment

Answer 2

Similar Homework Help Questions

Richard Cook purchased a company with assets of $500,000 and liabilities of $400,000. He paid $150,000...

Richard Cook purchased a company with assets of $500,000 and liabilities of $400,000. He paid $150,000 for the company. The journal entry (entries) to record the purchase include a: Select one: a. Debit to total assets of $450,000 and a debit to goodwill of $50,000. b. Debit to total assets of $500,000 and a credit to goodwill of $50,000. c. Debit to goodwill of $50,000 and a credit to cash of $40,000. d. Debit to total assets of $500,000 and...
On January 1, Richard Company acquired all the net assets of Ulmer Company by issuing debt...

On January 1, Richard Company acquired all the net assets of Ulmer Company by issuing debt with a market value of $350,000 and a payment of cash of $300,000. The fair value of Ulmer's identifiable net assets equaled their book values except for buildings and equipment which had a fair value of $120,000 greater than book value. Balance sheets for the two companies immediately preceding the acquisition were as follows: Richard Co. Ulmer Co. Cash $400,000 $150,000 Building & Equipment...
ABC company has assets totaling 175,000 and liabilities totaling 75,000. This company was purchased for 150,000. What a...

ABC company has assets totaling 175,000 and liabilities totaling 75,000. This company was purchased for 150,000. What amount of goodwill, if any, will be on the purchasing company's books? $0 $25,000 $50,000 $75,000

Plummet Corporation reported the book value of its net assets at $400,000 when Zenith Corporation acquired...

Plummet Corporation reported the book value of its net assets at $400,000 when Zenith Corporation acquired 100 percent ownership. The fair value of Plummet's net assets was determined to be $510,000 on that date. 9. Based on the preceding information, what amount of goodwill will be reported in consolidated financial statements presented immediately following the combination if Zenith paid $550,000 for the acquisition? A. $0 B. $50,000 C. $150,000 D. $40,000 *I know the answer is $40,000 but if you...
Plummet Corporation reported the book value of its net assets at $400,000 when Zenith Corporation acquired...

Plummet Corporation reported the book value of its net assets at $400,000 when Zenith Corporation acquired 100 percent ownership. The fair value of Plummet's net assets was determined to be $510,000 on that date. 9. Based on the preceding information, what amount of goodwill will be reported in consolidated financial statements presented immediately following the combination if Zenith paid $550,000 for the acquisition? A. $0 B. $50,000 C. $150,000 D. $40,000 *I know the answer is $40,000 but if you...
14. Purchased goodwill. Company A has the following net assets: Liabilities & Equity Carrying Value Assets...

14. Purchased goodwill. Company A has the following net assets: Liabilities & Equity Carrying Value Assets Cash Accounts receivable Inventory PPE (net) Carrying Value $25,000 Current liabilities 35,000 Common stock 42,000 Retained earnings $55,000 100,000 100,000 153,000 Totals $255,000 $255,000 The fair values of Company A are Assets Cash Accounts receivable Inventory PPE (net) Patents Liabilities Fair Value $25,000 35,000 122,000 205,000 18,000 (55,000 Fair value of net assets $350,000 Company B purchases Company A for $400,000. Write the journal...

On May 31, 2016, Columbanus Company paid $2,000,000 to acquire all of the common stock of...

On May 31, 2016, Columbanus Company paid $2,000,000 to acquire all of the common stock of Mistor Corporation, which became a division of Columbanus. Mistor reported the following balance sheet at the time of the acquisition: It was determined at the date of the purchase that the fair value of the identifiable net assets of Mistor was $1,875,000. At December 31, 2016, Mistor reports the following balance sheet information: The recorded amount for Mistor's net assets (excluding goodwill) is the...
Company A purchased 100% of the outstanding common stock of Company B for $500,000 cash, and...

Company A purchased 100% of the outstanding common stock of Company B for $500,000 cash, and Company A incurred $50,000 in indirect acquisition costs. The FMV of the net assets of Company B was $400,000, and the BV of the net assets of Company B was $300,000. When Company A performs an initial consolidation, the remaining consolidated balance in “Investment in Company B” post-consolidation will be: Question 6 options: a) $50,000 b) $500,000 c) $100,000 d) $0 Company P purchased...
On January 1, 2017, Mehan, Incorporated purchased 15,000 shares of Cook Company for $150,000 giving Mehan...

On January 1, 2017, Mehan, Incorporated purchased 15,000 shares of Cook Company for $150,000 giving Mehan a 15% ownership of Cook. The fair value of the 15% investment is the same value as indicated from the transaction when, on January 1, 2018, Mehan purchased an additional 25,000 shares (25%) of Cook for $300,000. This last purchase gave Mehan the ability to apply significant influence over Cook. The book value of Cook on January 1, 2017 was $1,000,000. The book value...

On January 1, 2017, Mehan, Incorporated purchased 15,000 shares of Cook Company for $150,000 giving Mehan...

On January 1, 2017, Mehan, Incorporated purchased 15,000 shares of Cook Company for $150,000 giving Mehan a 15% ownership of Cook. The fair value of the 15% investment is the same value as indicated from the transaction when, on January 1, 2018, Mehan purchased an additional 25,000 shares (25%) of Cook for $300,000. This last purchase gave Mehan the ability to apply significant influence over Cook. The book value of Cook on January 1, 2017 was $1,000,000. The book value...

Richard Cook purchased a company with assets of $500,000 and liabilities of $400,000. He paid $150,000...

Homework Answers