Question

Use the following facts for Multiple Choice problems 24 through 27 (each question is independent of MULTIPLE CHOICE Assignments with the logo in the margin are available in our See the Preface of the book for details. The others) Assume on January 1, 2019 an investor company paid $1,980 to an investee company in exchange for the following assets and liabilities transferred from the investe company Asset (Liability) Production equipment.. Factory Licenses LO d. Estimated Fair Value $500 800 700 In addition, the investor provided to the seller contingent consideration with a fair value of $200 and the investor paid an additional $80 of transaction costs to an unaffiliated third party. The contingent consideration is not a derivative financial instrument. The fair values are measured in accordance with FASB ASC 820: Fair Value Measurement 24. Acquiring net assets that do not constitute a business Assume the net assets transferred from the investee do not qualify as a "business," as that term is de fined in FASB ASC Master Glossary. At what amount will the Licenses be reported in the financial statements of the acquiring company on January 1, 2019? 700 b. 21 63 S791 25. Acquiring net assets that do not constitute a business Assume the net assets transferred from the investee do not qualify as a "business," as that term is de- fined in FASB ASC Master Glossary. At what amount will Goodwill be reported in the financial state- ments of the acquiring company on January 1, 2019? $ 0 b. $ 20 c. $ 60 d. $180 26. Acquiring net assets that constitute a business Assume the net assets transferred from the investee qualify as a "business," as that term is define FASB ASC Master Glossary. At what amount will the Licenses be reported in the financial stater of the acquiring company on January 1, 2019? $791 b. $763 $700 d. $693 a. c.

Answer 1

Answen 25. Clossary measures when net assets transferred from the iniestee do not qualify as a "busines as that term is defined in FASB ASC master than the investor the assets acquired based on their cost which is generally allocated to the assets relative fair value basis. As purchase price is allocated relative fair value basis the Goodwill is not calculated. Therefore the amount of Gwoduiell will be $ 0 А , Answer is $0 on a + а.

Ansmen 26. Estimated Amount to be considered as Purchase consideration when " Acquiring het assets that constitute a businesses 1,980 Fais vale (5) Production equipment factory Licenses Contingent consideration (200) Purchase consideration 2,800 500 800 700 when the transfer of net assets constitute as business then inues tors measures identifiable assete and liabilities at Fair value therefore licenses will reported at its Fair value ie $700. Ansumer is 6. $ 700 be