Lucky Corp. purchased the net assets of Cranky Company on 31 December 2020 for $920,000. Lucky...

Lucky Corp. purchased the net assets of Cranky Company on 31 December 2020 for $920,000. Lucky Corp. reports under IFRS and considers Cranky Company to be a cash-generating unit. The following is the balance sheet for Cranky Company on that date:

Assets		Liabilities & S/H Equity

Accounts Receivable	$340,000	Accounts Payable	$120,000
Inventory	100,000	Bonds Payable	250,000
Long-Term Investments	120,000	Common Stock	10,000
Plant & Equipment (net)	360,000	Retained Earnings	540,000
	$920,000		$920,000

Additional data:

a. The inventory has a fair market value of $89,000.

b. The plant & equipment have a fair market value of $380,000.

c. Not included in the balance sheet is an internally developed patent with an estimated fair value of $60,000.

d. All other assets and liabilities have fair values that are equal to their carrying amounts.

Required:

a) Calculate the amount of goodwill that Lucky Corp. will record upon the purchase of the net assets of Cranky Company.

b) Prepare the journal entry at 31 December 2020 to record the purchase of the net assets by Lucky Corp.

c) Explain how goodwill differs from other intangible assets. (2 marks)

Expert Solution

ekkarill92 answered 2 years ago

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