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Princess has acquired several other companies. Assume that Princess purchased Kittery for $9,000,000 cash. The book...

Princess has acquired several other companies. Assume that Princess purchased Kittery for $9,000,000 cash. The book value of Kittery's assets is $15,000,000 (market value, $16,000,000), and it has liabilities of $12,000,000 (market value, $12,000,000). Requirements 1. Compute the cost of goodwill purchased by Princess. 2. Record the purchase of Kittery by Princess. Requirement 1. Compute the cost of goodwill purchased by Princess. Purchase price to acquire Kittery Market value of Kittery's assets Less: Market value of Kittery's liabilities Less: Market value of Kittery's net assets Goodwill Requirement 2. Record the purchase of Kittery by Princess, Inc. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Date Accounts and Explanation Debit Credit Choose from any list or enter any number in the input fields and then continue to the next question.

Solutions

Expert Solution

1)
Purchase price to acquire Kittery $           90,00,000.00
Market value of Kittery's assets $                                                                  1,60,00,000.00
Less: Market value of Kittery's liabilities $                                                                  1,20,00,000.00
Less: Market value of Kittery's net assets $           40,00,000.00
Goodwill $           50,00,000.00
2)
Date
Accounts and Explanations Debit Credit
Asssets $        1,60,00,000.00
Goodwill $           50,00,000.00
              Liabilities $ 1,20,00,000.00
             Cash $    90,00,000.00

ekkarill92 answered 2 years ago
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