Larceny Company purchased another entity for P8,000,000. The assets and liabilities of the acquiree at fair value are as follows: Cash P1,000,000 Inventory 500,000 In-process research and development 5,000,000 Assembled workforce 1,200,000 Accounts payable 2,600,000 Notes Payable 400,000 REQUIRED: Determine the amount of goodwill Prepare the journal entry to record the acquisition
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Larceny Company purchased another entity for P8,000,000. The assets and liabilities of the acquiree at fair value are as follows:
Cash P1,000,000
Inventory 500,000
In-process research and development 5,000,000
Assembled workforce 1,200,000
Accounts payable 2,600,000
Notes Payable 400,000
REQUIRED:
- Determine the amount of
goodwill - Prepare the
journal entry to record the acquisition
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