Princess has acquired several other companies. Assume that Princess purchased Kittery for $6,000,000 cash. The book value of Kittery's assets is $16,000,000 (market value, $18,000,000), and it has liabilities of $14,000,000 (market value, $14,000,000). Requirements 1. 2. Compute the cost of goodwill purchased by Princess. Record the purchase of Kittery by Princess. Date Requirement 1. Compute the cost of goodwill purchased by Princess. Purchase price to acquire Kittery Market value of Kittery's assets Less: Market value of Kittery's liabilities Less: Market value of Kittery's net assets Goodwill Requirement 2. Record the purchase of Kittery by Princess, Inc. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) C Accounts and Explanation 6000000 Debit Credit

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Princess has acquired several other companies. Assume that Princess purchased Kittery for $6,000,000 cash. The book value of Kittery's assets is $16,000,000
(market value, $18,000,000), and it has liabilities of $14,000,000 (market value, $14,000,000).
Requirements
1.
2.
Compute the cost of goodwill purchased by Princess.
Record the purchase of Kittery by Princess.
Requirement 1. Compute the cost of goodwill purchased by Princess.
Purchase price to acquire Kittery
Market value of Kittery's assets
Less: Market value of Kittery's liabilities
Less: Market value of Kittery's net assets
Goodwill
Date
4
Requirement 2. Record the purchase of Kittery by Princess, Inc. (Record debits first, then credits. Select the explanation on the last line of the journal
entry table.)
Accounts and Explanation
6000000
10
Debit
Credit
Transcribed Image Text:Princess has acquired several other companies. Assume that Princess purchased Kittery for $6,000,000 cash. The book value of Kittery's assets is $16,000,000 (market value, $18,000,000), and it has liabilities of $14,000,000 (market value, $14,000,000). Requirements 1. 2. Compute the cost of goodwill purchased by Princess. Record the purchase of Kittery by Princess. Requirement 1. Compute the cost of goodwill purchased by Princess. Purchase price to acquire Kittery Market value of Kittery's assets Less: Market value of Kittery's liabilities Less: Market value of Kittery's net assets Goodwill Date 4 Requirement 2. Record the purchase of Kittery by Princess, Inc. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Accounts and Explanation 6000000 10 Debit Credit
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