Question

In: Accounting

Compute the amount of acquired Goodwill, including contingent earnings and bargain purchase Assume that you are...

Compute the amount of acquired Goodwill, including contingent earnings and bargain purchase

Assume that you are charged with assigning fair values related to a $4,560,000 acquisition. You determine that the fair value of the net identifiable tangible assets is $2,220,000. You also conclude that the purchase included a Customer List with a fair value at $408,000.

a. How much Goodwill will you record in this acquisition?
$Answer

b. Continuing from part (a), now also assume that the purchase and sale agreement requires the payment of an additional $1,110,000 if the subsidiary achieves a certain level of earnings. You estimate the fair value of that contingent earnings clause in the agreement to be $264,000. How does this additional information affect your computation of Goodwill?

The amount of Goodwill recorded is $Answer

c. This part of the exercise is independent of parts (a) and (b). Assume that the purchase price is $4,560,000 and that fair value of the net identifiable tangible assets is $2,220,000. You also conclude that the purchase included a Customer List that you value at $768,000 and a Patent valued at $2,280,000. How much Goodwill will you record in this acquisition?

The amount of Goodwill recorded is: $Answer

Solutions

Expert Solution

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

Compute the amount of acquired Goodwill, including contingent earnings and bargain purchase Assume that you are...
Compute the amount of acquired Goodwill, including contingent earnings and bargain purchase Assume that you are charged with assigning fair values related to a $6,080,000 acquisition. You determine that the fair value of the net identifiable tangible assets is $2,960,000. You also conclude that the purchase included a Customer List with a fair value at $544,000. How much Goodwill will you record in this acquisition? Continuing from part (a), now also assume that the purchase and sale agreement requires the...
Find the FASB rules that define how to compute the goodwill (or gain on bargain purchase)...
Find the FASB rules that define how to compute the goodwill (or gain on bargain purchase) in a business combination. Then find the general rule that says goodwill should not be amortized. (You may look for the allowable alternative of amortizing goodwill, for private companies.)
How are direct combination costs, contingent consideration, and a bargain purchase reflected in recording an acquisition...
How are direct combination costs, contingent consideration, and a bargain purchase reflected in recording an acquisition transaction?
5. Recognizing goodwill or gain from a bargain purchase is thefinal step of acquisition method....
5. Recognizing goodwill or gain from a bargain purchase is the final step of acquisition method. Therefore, Goodwill or Gain on bargain purchase is measured as the difference between the:Select one:a. Cost of the assets given up and the cost of the net assets acquired.b. Fair value of the consideration transferred, and the fair value of net identifiable assets.c. present value of the consideration transferred, and the present value of the net assets acquiredd. Cost of the net assets acquired,...
Sanders acquired 100% of Clinton on January 1, 2017. The transaction was not a bargain purchase....
Sanders acquired 100% of Clinton on January 1, 2017. The transaction was not a bargain purchase. On the date of the acquisition, Clinton's Building account had a net book value of 3,338,416 and a fair value of 3,981,039. As of 1/1/2017, Clinton's buildings have a remaining life of 10 years and are depreciated on a straight-line basis with no salvage value. When preparing Sanders' consolidated financial statements for 2017, what AAP adjustment must be made for Depreciation expense?
For a capital lease with no salvage value or bargain purchase option, the amount recorded initially...
For a capital lease with no salvage value or bargain purchase option, the amount recorded initially by the lessee as the leased asset should normally: Select one: a. Exceed the total of the minimum lease payments. b. Exceed the present value of the minimum lease payments at the beginning of the lease. c. Equal the total of the minimum lease payments. d. Equal the present value of the minimum lease payments at the beginning of the lease.
What kind of asset is goodwill? How do you determine the amount of goodwill? How do...
What kind of asset is goodwill? How do you determine the amount of goodwill? How do you treat goodwill subsequent to its acquisition?
Date of Acquisition Consolidation Eliminating Entries, Bargain Purchase Peregrine Company acquired 80 percent of Sparrow Company’s...
Date of Acquisition Consolidation Eliminating Entries, Bargain Purchase Peregrine Company acquired 80 percent of Sparrow Company’s common stock for $20,000,000 in cash; fees paid to an outside firm to estimate the earning power of Sparrow and the fair values of its properties amounted to $2,500,000. Sparrow’s equity consisted of $3,000,000 in capital stock, $25,000,000 in retained earnings, $1,500,000 in accumulated other comprehensive loss, and $500,000 in treasury stock. Book values of Sparrow’s identifiable assets and liabilities approximated their fair values...
Consolidated Balance Sheet Working Paper, Bargain Purchase On January 1, 2019, Paxon Corporation acquired all of...
Consolidated Balance Sheet Working Paper, Bargain Purchase On January 1, 2019, Paxon Corporation acquired all of the outstanding common stock of Saxon Company for $1.7 billion cash. The balance sheets of Paxon and Saxon, immediately prior to the combination, are shown below: Balance Sheets (in millions) Paxon Saxon Assets Cash and receivables $2,860 $720 Inventory 1,700 900 Equity method investments -- 300 Land 650 175 Buildings and equipment, net 2,400 600 Total assets $7,610 $2,695 Liabilities and Shareholders' Equity Current...
what is a contingent liability and how would you determine the amount to record for a...
what is a contingent liability and how would you determine the amount to record for a contingent liability?
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT