a)
Amount paid for acquisition | 450000 | |
less:Book value of equity acquired | ||
common stock | 300000 | |
Retained earning | 20000 | |
Undervaluation of lalnd | 30000 | |
undervaluation of equipment | 5000 | |
Book value of equity | (355000) | |
Goodwill at time of acquisition | 95000 |
b)
Goodwill at time of acquisition | 95000 |
less:Amortization of goodwill [95000/10] |
-9500 |
Balance in goodwill after one year | 85500 |
1-Arlington, Inc. purchases all of the common stock of Frisco Company for $450,000 cash. At the...
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On January 1,2014, Father Company acquired an 80 percent interest in Sun Company for 425,000. The acquisition-date fair value of the 20 percent non-controlling interest's ownership shares was $102,500. Also as of that date, Sun reported total stockholders' equity of $400,000: $100,000 in common stock and $300,000 in retained earnings. In setting the acquisition price, Father appraised four accounts at values different from the balances reported within Sun's financial records. Problems Buildings (8-year remaining life)..............undervalued by $20,000 Land,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,undervalued by $50,000...
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Giant acquired all of Small’s common stock on January 1, 2014, in exchange for cash of $770,000. On that day, Small reported common stock of $170,000 and retained earnings of $400,000. At the acquisition date, $34,500 of the fair-value price was attributed to undervalued land while $99,000 was assigned to undervalued equipment having a 10-year remaining life. The $66,500 unallocated portion of the acquisition-date excess fair value over book value was viewed as goodwill. Over the next few years, Giant...
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Assume that on January 1, 2013, an investor company acquired 100% of the outstanding voting common stock of an investee company. The following financial statement information is for the investor company and the investee company on January 1, 2013, prepared immediately before this transaction. Book Values Investor Investee Receivables & inventaries $150,000 $75,000 Land 300,000 150,000 Property & equipment 337,500 150,000 Total assets $787,500 $375,000 Liabilities $225,000 $120,000 Common stock ($2 par) 30,000 15,000 Additional paid-in capital 420,000 225,000 Retained...
Lucky’s Company acquires Waterview, Inc., by issuing 40,000 shares of $1 par common stock with a market price of $25 per share on the acquisition date and paying $125,000 cash. The assets and liabilities on Waterview’s balance sheet were valued at fair values except equipment that was undervalued by $300,000. There was also an unrecorded patent valued at $40,000, as well as an unrecorded trademark valued at $75,000. In addition, the agreement provided for additional consideration, valued at $60,000, if...
On July 1, 2012, an acquiring company Corp. paid $1,100,000 for 100% of the outstanding common stock of an investee company in a transaction that qualifies as a business combination. Immediately preceding the transaction, the investee company had the following condensed balance sheet: Pre-acquisition amounts reported on investee's balance sheet Current assets $150,000 Property and equipment, net 1,400,000 Liabilities 750,000 Equity 800,000 The acquisition-date fair value of the property and equipment was $220,000 more than its carrying amount. For all...
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Giant acquired all of Small’s common stock on January 1, 2014, in exchange for cash of $770,000. On that day, Small reported common stock of $170,000 and retained earnings of $400,000. At the acquisition date, $64,000 of the fair-value price was attributed to undervalued land while $59,000 was assigned to undervalued equipment having a 10-year remaining life. The $77,000 unallocated portion of the acquisition-date excess fair value over book value was viewed as goodwill. Over the next few years, Giant...