1. On January 1, Year 1, Pungent Corporation acquired 75% of Summer Corporation's 200,000 outstanding common shares for $2,850,000. On January 1, the book value of Summer's net assets was $3,000,000. Book value equaled fair value for all of Summer's assets and liabilities except land, which had a fair value $200,000 greater than book value, and equipment, which had a fair value $150,000 greater than book value. On January 1, Year 1, Summer had a non-compete agreement with a fair value of $300,000. Compute the amount of goodwill (show your work) to be reported on Pungent Corporation's December 31, Year 1 balance sheet under U.S. GAAP?
2. List the 4 steps in applying the Acquisition method of accounting.
3. In a business combination accounted for as an acquisition, the appraised values of the identifiable assets acquired exceeded the acquisition price. Describe how the excess appraised valued should be reported?
4. Direct costs of a business combination, including findersâ fees and consulting fees, are recognized as expenses in the period incurred. True or False
1. On January 1, Year 1, Pungent Corporation acquired 75% of Summer Corporation's 200,000 outstanding common shares for $2,850,000. On January 1, the book value of Summer's net assets was $3,000,000. Book value equaled fair value for all of Summer's assets and liabilities except land, which had a fair value $200,000 greater than book value, and equipment, which had a fair value $150,000 greater than book value. On January 1, Year 1, Summer had a non-compete agreement with a fair value of $300,000. Compute the amount of goodwill (show your work) to be reported on Pungent Corporation's December 31, Year 1 balance sheet under U.S. GAAP?
2. List the 4 steps in applying the Acquisition method of accounting.
3. In a business combination accounted for as an acquisition, the appraised values of the identifiable assets acquired exceeded the acquisition price. Describe how the excess appraised valued should be reported?
4. Direct costs of a business combination, including findersâ fees and consulting fees, are recognized as expenses in the period incurred. True or False
Related questions
Grant Company acquired all of Bedford Corporation's assets andliabilities on January 1, 20X2, in a business combination. At thatdate, Bedford reported assets with a book value of $642,000 andliabilities of $376,000. Grant noted that Bedford had $43,000 ofcapitalized research and development costs on its books at theacquisition date that did not appear to be of value. Grant alsodetermined that patents developed by Bedford had a fair value of$140,000 but had not been recorded by Bedford. Except for buildingsand equipment, Grant determined the fair value of all other assetsand liabilities reported by Bedford approximated the recordedamounts. In recording the transfer of assets and liabilities to itsbooks, Grant recorded goodwill of $107,000. Grant paid $534,000 toacquire Bedford's assets and liabilities. If the book value ofBedford's buildings and equipment was $348,000 at the date ofacquisition, what was their fair value? |
