Botiating to acquire Het assets öf Magenta Company. Purple is willing to pay goodwill computed by capitalizing at 25% Magenta's average earnings in excess of the 10% normal rete pased on appraised value of net assets. Magenta's income for the past three years average P3,000,00 Magenta's assets and liabilities are: Book value Assets, excluding goodwill Liabilities P30,000,000 10,500,000 Appraised value P39,000,000 10,500,000 Shat is the amount of goodwill?
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- 4. Magsano Company is planning to sell the business to new interests. The accumulative net earnings for the past five years amounted to P9,500,000. The normal rate is 20%. The fair value of net assets of the entity at the current year-end was $7,000,000. What is the amount of goodwill if excess earnings are purchased for 5 years? a. P 7,000,000 b. P 2,050,000 c. P 2,000,000 d. P 1,000,000CARAT CORP. has completed its current year financial statements which reveal, in part, the following information: *Profit for the year - P110,000 *Total Comprehensive Income - P130,000 *Other comprehensive income relates to the revaluation of land and buildings to fair value *Dividends paid - P35,000 *Opening equity balances - share capital P300,000, retained earnings P220,000, asset revalution surplus P60,000 *No more share capital was issued during the reporting period The total equity at the end of the current year is: Choices a. 695,000 b. 675,000 c. 655,000 d. 580,000Assume that the following balance sheets are stated at book value. The fair market value of James's fixed assets is equal to $9,600. Jurion pays $16,360 for James and raises the needed funds through an issue of long-term debt. Current assets $12,225 Net fixed 36,450 assets Total Jurion Co. Total Current assets $3,490 Net fixed assets 6,640 Current assets Fixed assets Goodwill Total $ 5,420 Long-term debt 9,950 Equity 33,305 $48,675 Total $48,675 Current liabilities James, Inc. $10,130 Current liabilities $ 1,420 Long-term debt 1,990 Equity 6,720 Total $10,130 Construct a postmerger balance sheet assuming that Jurion Co. purchases James, Inc., and the purchase method of accounting is used. (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) Jurion Co., post-merger Current liabilities Long-term debt Equity Total
- 4. Net income for Jimin Company for 2020 includes the effect of the following transactions involving the sale of fixed assets: Sales Price P20,000 25,000 Purchases of fixed assets during 2020 amounted to P340,000. The Accumulated Depreciation account increased P40,000 during 2020. How much is the depreciation expense for 2020? Cost P 80,000 150,000 Gain (Loss) P 10,000 (18,000) Asset YJefferson Enterprises acquired assets and liabilities of Alaska Company for P600,000. At that date, Alaska Company had the following book values and market values: Account.. Book Value . . Market Value Cash and Receivables P25,000.. P25,000 Inventory. 125,000. 180,000 Plant Assets (net). 300,000. 475,000 Current Liabilities. (60,000). - (60,000) Long-term Debt. (120,000).. (120,000) Ordinary Shares. (15,000) Retained Earnings. (255,000) (do not use comma on the answer. Follow this format: P1 250 000) 1. What amount is included in the balance sheet after the business combination with regard to inventory? 2. What amount is included in the balance sheet after the business combination with regard to plant assets? 3. What amount is included in the balance sheet after the business combination with regard to goodwill? P100 0009. RGW Industries purchased the net assets of SP Company for P1,300,000. A schedule of the net assets of SP Company, as recorded on SP Company's books at the time of the acquisition, is as follows: Assets Cash Receivable Inventory Land, buildings, and equipment (net) Total assets Liabilities Current liabilities Long-term debt P31,000 250,000 302,000 350,000 P933,000 Inventory Land, building and equipment Patent P90,000 185,000 P275,000 P658,000 Total liabilities Net assets (book value) The following schedule shows the differences between the recorded costs and market values of the assets of SP Company at the date of the acquisition: Cost P302,000 350,000 0 Purchased in-process research and development Existing workforce Totals P652,000 P275,000 Liabilities Determine the amount of goodwill to be recognized on the acquisition? a. P642,000 c. P74,000 b. P464,000 d. P164,000 0 0 Market P400,000 390,000 40,000 300,000 90,000 P1,220,000 P275,000
- This year, Sigma Inc. generated $662,250 income from its routine business operations. In addition, the corporation sold the following assets, all of which were held for more than 12 months: Initial Sale Price O$ 75,000 41,750 Acc. Basis Depr.* $ 149,600 $ 103,600 Marketable securities Production equipment Business realty: Land Building 82,880 237,000 270,000 247,250 210,500 81,000 *Through date of sale. Required: a. Compute Sigma's taxable income assuming that it used the straight-line method to calculate depreciation on the building and has no nonrecaptured Section 1231 losses. b. Recompute taxable income assuming that Sigma sold the securities for $159,200 rather than $75,000.On July 1, 2020, Blue George Company purchased 25% interest of Pink Conrad for P150,000. Blue George incurred transaction cost equal to 5% on the transaction price. On October 1, 2020, Pink Conrad declared dividends of P80,000. At the end of 2020, Pink Conrad reported net income of P200,000. On January 1, 2021, the fair values of Pink Conrad's net assets were as follows:Current Assets - P100,000;Equipment - P150,000;Patent – P120,000;Land - P50,000;Buildings - P300,000; andLiabilities - P80,000. On January 1, 2021, Blue George Company purchased 50% interest of the Pink Conrad Company by issuing 100,000 shares of its P1 par value stock when the fair value of the stock was P6.20. Pink Conrad paid for the legal fees of P10,000 and securities SEC registration of P20,000 which was reimbursed by Blue George. The Patent of Pink Conrad refers to the technology purchased by Pink Conrad from Blue George years ago. Blue George had an outstanding unearned revenue related to the Patent amounting to….Platek Enterprises purchases 100 percent of Smith Company for P600,000. At that date Smith Company had the following book value and market values:Accounts Book value Market valueCash and receivables P25,000 P25,000Inventory 125,000 180,000Plant assets (net) 300,000 475,000Current liabilities (60,000) (60,000)Long-term debt (120,000) (120,000)Common stock (15,000)Retained earnings (255,000)What is the total purchase differential (excess of cost over book value)? P150,000 P100,000 P420,000 P330,000
- On July 1, 2020, Blue George Company purchased 25% interest of Pink Conrad for P150,000. Blue George incurred transaction cost equal to 5% on the transaction price. On October 1, 2020, Pink Conrad declared dividends of P80,000. At the end of 2020, Pink Conrad reported net income of P200,000. On January 1, 2021, the fair values of Pink Conrad's net assets were as follows:Current Assets - P100,000;Equipment - P150,000;Patent – P120,000;Land - P50,000;Buildings - P300,000; andLiabilities - P80,000. On January 1, 2021, Blue George Company purchased 50% interest of the Pink Conrad Company by issuing 100,000 shares of its P1 par value stock when the fair value of the stock was P6.20. Pink Conrad paid for the legal fees of P10,000 and securities SEC registration of P20,000 which was reimbursed by Blue George. The Patent of Pink Conrad refers to the technology purchased by Pink Conrad from Blue George years ago. Blue George had an outstanding unearned revenue related to the Patent amounting to…Lee Company is contemplating the purchase of the net assets of Min Company for P800,000 cash. To contemplate the transactin, direct acquisition costs are P15,000. The balance sheet of Min Company on the purchse date is as follows: Min Company Balance Sheet December 31, 2020 Assets Liabilities & Equity Current Assets 80,000 Liabilities 100,000 Land 50,000 Common Stock, P10 par 100,000 Building 450,000 Paid-in capital in excess of par 150,000 Accumulated Depreciation (200,000) Retained Earnings…Following is a list of items relating to the financial statements of YKN Bhd for the year ended 31December 2020• Amortisation of intangible assets of RM346,339• Corporate tax rate is at 24%.• Finance costs of RM831,138• Finance income of RM173,421• Gain due to exchange differences from translating functional currencies into presentationcurrency of RM120,000• Gain on disposals of major subsidiaries amounted to RM1,500• Gain on sales of manufacturing operating segment of RM100,000• Gains on re-measuring available-for-sale investment of RM80,000• Loss on litigation settlements of RM2,125,000• Loss amounted to RM450,000 due to disposal of its cotton mills, which constitute amajor line of business• Loss arising from translating the financial statements of a foreign operation of RM33,000• Loss from disposal of financial assets of RM50,000• Loss on disposals of items of property, plant and equipment of RM34,000• Loss on impairment of goodwill of RM110,000• Loss on re-measuring financial…