Harry acquires 100% of David on January 1, 2010 by issuing 10,000 shares with par value $1 and fair value $70. In addition, Harry agrees to pay an additional $100,000 if David earns $50,000 net income in 4 years. David will be operated as a separate subsidiary of Harry. At acquisition date, there is a 80% probability of this occurring. On January 1, 2010, Harry had net assets with book value of $400,000 and fair value of $500,000. At that date, David had net assets with book value of $200,000 and fair value of $150,000. At December 31, 2012, Harry has net assets with book value of $600,000 and fair value of $800,000. At that date, David has net assets with book value of $300,000 and fair value of $400,000. Assume that all differences between book value and fair value relate to Land. a. How much is goodwill at January 1, 2010 (show calculation). b. How much is goodwill at December 31, 2012 (assume no impairment)

Harry acquires 100% of David on January 1, 2010 by issuing 10,000 shares with par value $1 and fair value $70. In addition, Harry agrees to pay an additional $100,000 if David earns $50,000 net income in 4 years. David will be operated as a separate subsidiary of Harry. At acquisition date, there is a 80% probability of this occurring. On January 1, 2010, Harry had net assets with book value of $400,000 and fair value of $500,000. At that date, David had net assets with book value of $200,000 and fair value of $150,000. At December 31, 2012, Harry has net assets with book value of $600,000 and fair value of $800,000. At that date, David has net assets with book value of $300,000 and fair value of $400,000. Assume that all differences between book value and fair value relate to Land. a. How much is goodwill at January 1, 2010 (show calculation). b. How much is goodwill at December 31, 2012 (assume no impairment)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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k Robbins owns 40% of Smith and has a balance in its Investment Account of $200,000. On January 1, 2020 Robbins purchases an additional 20% of Smith for $150,000 cash. In addition to the entry, Dr. Investment 150,000 and Cr. Cash 150,000 what additional journal entry by Robbins is required. (hint: revalue the original 40% ownership interest of Robbins). O Dr. Investment $40,000. Cr. Gain on Revaluation of Investment $40,000 O Dr. Investment $40,000. Cr. Additional Paid in Capital. $40,000 esc Dr. Investment $100,000. Cr. Additional Paid in Capital $100,000 Dr. Investment $100,000 Cr. Gain on Revaluation of Investment. $100,000 ↳ Moving to the next question prevents changes to this answer. $180 ! 1 option A P N # 3 5088AAG 2 W S X H 25 command 20 E D $ 4 888 F4 C tv R F % Pages T V A MacBook Air G Y B & 7 H F7 Question 4 of 15 コ *00 8 N DII F8 J Ha Han Assi CON 201-0 h. T& 2)d FO M
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