1) world corporation is buying all the assets and assuming all the liabilities The following information is available for Maxton at the day of the purchase:
cash 300,000 Accounts payable 50,000
Accounts Rec 100,000 Bond payable 100,000
Inventory 100,000 Common stock 200,000
Land 300,000 Retained Earnings 250,000
The inventory is worth $50,000 and the land is worth $500,000. Additionally, the Bond Payable debt is payable interest only at 10% per year for the next 5 years and then the principal is due. Current interest rates for similar debt is 8%. World Corp will pay $1,000,000 for Maxton. How much of the purchase price will World Corp debit to good will?
2) Shyam wants to calculate how much money he will get after 2 years at a rate of interest of 10% p.a. computed half-yearly on a sum of money of $ 5000?
Please provide the correct answer for both.
1. In order to calculate the amount of goodwill, we need to deduct the net assets value from the purchase consideration.
Net Assets = 300,000+ 100,000 + 50,000 + 500,000 - 50,000 - 100,000 - 200,000
- 250,000 = 800,000
good will = 200,000
2. Amount = $ 5,000 × (1.05)^4
= $ 6,077.53
1) world corporation is buying all the assets and assuming all the liabilities The following information...
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On January 1, 20X2, Plend Corporation acquired all of Stork Corporation's assets and liabilities by issuing shares of its common stock. Partial balance sheet data for the companies prior to the business combination and immediately following the combination are as follows: Plend Corp. Stork Corp. Book Value Book Value Combined Entity Assets Cash $ 40,000 $ 10,000 $ 50,000 Accounts Receivable 60,000 30,000 88,000 Inventory 50,000 35,000 96,000 Buildings & Equipment (net) 300,000 110,000 430,000 Goodwill ? Total Assets $...
On January 1, 20X2, Plend Corporation acquired all of Stork Corporation's assets and liabilities by issuing shares of its common stock. Partial balance sheet data for the companies prior to the business combination and immediately following the combination are as follows: Plend Corp. Stork Corp. Book Value Book Value Combined Entity Assets Cash $ 40,000 $ 10,000 $ 50,000 Accounts Receivable 60,000 30,000 88,000 Inventory 50,000 35,000 96,000 Buildings & Equipment (net) 300,000 110,000 430,000 Goodwill ? Total Assets $...
On January 1, 20X2, Plend Corporation acquired all of Stork Corporation's assets and liabilities by issuing shares of its common stock. Partial balance sheet data for the companies prior to the business combination and immediately following the combination are as follows: Plend Corp. Stork Corp. Book Value Book Value Combined Entity Assets Cash $ 40,000 $ 10,000 $ 50,000 Accounts Receivable 60,000 30,000 88,000 Inventory 50,000 35,000 96,000 Buildings & Equipment (net) 300,000 110,000 430,000 Goodwill ? Total Assets $...
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prepaid expenses = $50,000
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(prepaid expenses are $50,000)
Problem 3 Calculate the following information: 1. Quick ratio 2. Accounts receivable turnover ratio 3. Net return on total assets 4. Total liabilities to total assets ratio 5. Times interest earned ratio 6. Return on sales 7. Return on equity Sales: $750,000 Cash: $50,000 Inventory: $150,000 Common Stock: $100,000 Accounts Payable: $100,000 Prepaid expenses: $50,000 Long term debt: $200,000 Land and Building: $500,000 Operating Income: $450,000 Taxes: $200,000 Accounts Receivable: $70,000 Retained Earnings: $400,000 Cost of...
Balance Sheets Liabilities R.A Ltd. A.R Ltd. Assets R.A Ltd. A.R Ltd. Share Capital £ 600,000 £ 800,000 Land and Building £ 500,000 £ 800,000 Reseve and Surplus £ 150,000 £ 350,000 Plant and Machinery £ 300,000 £ 700,000 14% Debentures £ 400,000 £ 1,000,000 Furniture £ 200,000 £ 400,000 Mortgaged Loan £ 100,000 £ 500,000 Office Equipments £ 110,000 £ 230,000 Sundry Creditors £ 200,000 £ 300,000 Stock £ 300,000 £ 500,000 Bills Payable £ 100,000 £ 250,000 Sundry...