Homework Answers
Answer : False.
Purchase price of the acquired company is less than fair value of net assets acquired then, a gain on bargain purchase is recorded.
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QUESTION 18 Long term assets of the acquired company are reduced in proportion to their fair...
3. Under the provisions of the business combination rules, when the fair value of identifiable net assets acquired exce...
3. Under the provisions of the business combination rules, when the fair value of identifiable net assets acquired exceeds the investment cost, which of the following statements is correct? A) A gain from a bargain purchase is recognized for the amount that the fair value of the identifiable net assets acquired exceeds the acquisition price. B) The difference is allocated first to reduce proportionately (according to market value) non-current assets, then to non-monetary current assets, and any negative remainder is...
which of the following best describes the accounting for goodwill acquired in business acquisition? a. Goodwill...
which of the following best describes the accounting for goodwill acquired in business acquisition? a. Goodwill can be recorded by a company when it can demonstrate that the company has generated excess market value directly attributable to its strong reputation b. Goodwill is recorded as an asset when the purchaser of a business believes that the purchased business has a good reputation among its customers c. Goodwill is recorded as an asset when the purchaser of a business pays less...
TRUE/FALSE 1. When control is obtained through a stock acquisition, combined financial statements automatically result for...
TRUE/FALSE 1. When control is obtained through a stock acquisition, combined financial statements automatically result for future periods. 2. Tax loss carryovers are generally transferable in a business combination and may be recorded as an asset. 3. In all business combinations, one company gains control over the assets and liabilities of another company. 4. Regardless of the purchase price, the current assets, liabilities, and long-term investments (not including equity method investments) are recorded at fair market value in a business...
Goodwill is the difference between the purchase price and the estimated fair value of the assets...
Goodwill is the difference between the purchase price and the estimated fair value of the assets acquired. Question options: True False
Question 11 Goodwill is: the excess of the appraised value of net assets over the fair...
Question 11 Goodwill is: the excess of the appraised value of net assets over the fair value of net assets O the excess of the appraised value of net assets over the book value of net assets the excess of the purchase price of net assets over the fair value of net assets O the excess of the purchase price of net assets over the book value of net assets
Company A has overstated the fair value of net assets of its acquisition of Company B...
Company A has overstated the fair value of net assets of its acquisition of Company B in 2017. The price of acquisition was 169. Company A estimated goodwill to be 53. In 2018, you as an analyst want to make an accounting adjustment to the recorded fair value net assets by writing-down 100% of them based on newly acquired information. However, the goodwill will remain on the balance sheet. With what amount will the shareholder’s equity in 2018 decrease (in...
5. Company A buys Company B and pays $5 million more than the fair value of...
5. Company A buys Company B and pays $5 million more than the fair value of the identifiable assets and liabilities. The $5 million was recorded as Goodwill. Which of the following statements is true? A. Goodwill is amortized to expense over 40 years. C B. The rules have changed so that goodwill is now expensed immediately C. Goodwill must be checked for impairment periodically and reduced if impaired. D. Goodwill is amortized over an appropriate period of 40 years...
Exercise 2-10 On January 1, 2013, Porsche Company acquired the net assets of Saab Company for...
Exercise 2-10
On January 1, 2013, Porsche Company acquired the net assets of Saab
Company for $449,660 cash. The fair value of Saab’s identifiable
net assets was $375,570 on this date. Porsche Company decided to
measure goodwill impairment using the present value of future cash
flows to estimate the fair value of the reporting unit (Saab). The
information for these subsequent years is as follows:
Year
Present Value
of Future Cash Flows
Carrying Value of
Saab’s Identifiable
Net Assets*
Fair...
QUESTION 5 Wilder Company purchased the net assets of Stocks Company for $225,000. On the date...
QUESTION 5 Wilder Company purchased the net assets of Stocks Company for $225,000. On the date of Wilder's purchase, Stocks Company had $30,000 (book and fair value) of liabilities The fair values of Stocks Company's assets, when acquired, were Current assets $ 120,000 Noncurrent assets 180.000 Total $300,000 How should the 545,000 difference between the fair value of the net assets acquired (5270,000) and the consideration paid ($225,000) be accounted for by Wilder Company? A. The $45.000 difference should be...
Problem 3 Avery Company acquired the net assets of Iowa Company on June 1, 20X1. The...
Problem 3 Avery Company acquired the net assets of Iowa Company on June 1, 20X1. The net assets acquired include plant assets that are provisionally estimated to have a fair value of $410,000 with a 10-year usable life and no salvage value and buildings that are provisionally estimated to have a fair value of $162,000 with a 15-year usable life and salvage value of $18,000. Depreciation is recorded based on months in service. The remaining unallocated amount of the price...
3. Under the provisions of the business combination rules, when the fair value of identifiable net assets acquired exceeds the investment cost, which of the following statements is correct? A) A gain from a bargain purchase is recognized for the amount that the fair value of the identifiable net assets acquired exceeds the acquisition price. B) The difference is allocated first to reduce proportionately (according to market value) non-current assets, then to non-monetary current assets, and any negative remainder is...
TRUE/FALSE 1. When control is obtained through a stock acquisition, combined financial statements automatically result for future periods. 2. Tax loss carryovers are generally transferable in a business combination and may be recorded as an asset. 3. In all business combinations, one company gains control over the assets and liabilities of another company. 4. Regardless of the purchase price, the current assets, liabilities, and long-term investments (not including equity method investments) are recorded at fair market value in a business...
Question 11 Goodwill is: the excess of the appraised value of net assets over the fair value of net assets O the excess of the appraised value of net assets over the book value of net assets the excess of the purchase price of net assets over the fair value of net assets O the excess of the purchase price of net assets over the book value of net assets
5. Company A buys Company B and pays $5 million more than the fair value of the identifiable assets and liabilities. The $5 million was recorded as Goodwill. Which of the following statements is true? A. Goodwill is amortized to expense over 40 years. C B. The rules have changed so that goodwill is now expensed immediately C. Goodwill must be checked for impairment periodically and reduced if impaired. D. Goodwill is amortized over an appropriate period of 40 years...
Exercise 2-10
On January 1, 2013, Porsche Company acquired the net assets of Saab
Company for $449,660 cash. The fair value of Saab’s identifiable
net assets was $375,570 on this date. Porsche Company decided to
measure goodwill impairment using the present value of future cash
flows to estimate the fair value of the reporting unit (Saab). The
information for these subsequent years is as follows:
Year
Present Value
of Future Cash Flows
Carrying Value of
Saab’s Identifiable
Net Assets*
Fair...
QUESTION 5 Wilder Company purchased the net assets of Stocks Company for $225,000. On the date of Wilder's purchase, Stocks Company had $30,000 (book and fair value) of liabilities The fair values of Stocks Company's assets, when acquired, were Current assets $ 120,000 Noncurrent assets 180.000 Total $300,000 How should the 545,000 difference between the fair value of the net assets acquired (5270,000) and the consideration paid ($225,000) be accounted for by Wilder Company? A. The $45.000 difference should be...
Problem 3 Avery Company acquired the net assets of Iowa Company on June 1, 20X1. The net assets acquired include plant assets that are provisionally estimated to have a fair value of $410,000 with a 10-year usable life and no salvage value and buildings that are provisionally estimated to have a fair value of $162,000 with a 15-year usable life and salvage value of $18,000. Depreciation is recorded based on months in service. The remaining unallocated amount of the price...
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