Intermediate Accounting, 10 Ed
10th Edition
ISBN: 9781260310177
Author: Mark W. Nelson, Wayne B. Thomas J. David Spiceland
Publisher: McGraw-Hill Education
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Chapter 10, Problem 10.7E
To determine
Goodwill is an intangible asset. It is defined as the excess of cost of an acquired company over the fair value of its net assets. Net assets are the difference between the total assets and the total liabilities. The value of the goodwill is the unique features of the company such as the location of the company, its efficient employees, and its reputation, which cannot be associated with any specific asset of the Company.
To Calculate: The amount paid for the goodwill.
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Problem 7-3B (Algo) Calculate and record goodwill (LO7-2)
Northern Equipment Corporation purchased all the outstanding common stock of Pioneer Equipment Rental for
$5,590,000 in cash. The book values and fair values of Pioneer's assets and liabilities were as follows:
Accounts Receivable $ 740,000
Book Value
Fair Value
$ 640,000
Buildings
4,090,000
4,790,000
Equipment
100,000 190,000
Accounts Payable
(760,000)
(760,000)
$
$
Net assets
4,170,000
4,860,000
Required:
1. Calculate the amount Northern Equipment should report for goodwill.
2. Record Northern Equipment's acquisition of Pioneer Equipment Rental.
Complete this question by entering your answers in the tabs below.
Required Required
1
2
Record Northern Equipment's acquisition of Pioneer Equipment Rental. (If no entry is required for a
transaction/event, select "No Journal Entry Required" in the first account field.)
View transaction list
Journal entry worksheet
<
1
Record the acquisition of Pioneer Equipment…
Problem 4
Archibald Corporation, a public corporation exchanged an asset with Bass Industries.
Archibald
Bass
$ 320,000 $
430,000
Original cost of the asset
Accumulated depreciation
$
256,000 $
344,000
Fair value of the asset
$
80,000 $
120,000
9 Required-
10 a) Prepare the journal entries on the books of Archibald Corp assuming that the exchange would have commercial substance.
11 b) Prepare the journal entries on the books of Archibald Corp assuming that the exchange would have no commercial substance.
12
13 RESPONSE:
14
15
Debit
Credit
Date
a)
Account Name
New Asset
16
17
18
+
Exercise 10-6 (Algo) Goodwill (LO10-1]
On March 31, 2021, Wolfson Corporation acquired all of the outstanding common stock of Barney Corporation for $18,500,000 in cash.
The book values and fair values of Barney's assets and liabilities were as follows:
Book Value
Fair Value
Current assets
$ 7,500,000
12,500,000
1,150,000
5,500,000
7,500,000
Property, plant, and equipment
Other assets
$ 9,000,000
15,500,000
Current liabilities
Long-term liabilities
1,650,000
5,500,000
7,000,000
Required:
Calculate the amount paid for goodwillI.
* Answer is complete but not entirely correct.
Goodwill
$ 20,150,000 x
Chapter 10 Solutions
Intermediate Accounting, 10 Ed
Ch. 10 - Prob. 10.1QCh. 10 - Prob. 10.2QCh. 10 - Prob. 10.3QCh. 10 - Prob. 10.4QCh. 10 - Prob. 10.5QCh. 10 - Prob. 10.6QCh. 10 - When an asset is acquired and a note payable is...Ch. 10 - Explain how assets acquired in exchange for equity...Ch. 10 - Prob. 10.9QCh. 10 - What account is credited when a company receives...
Ch. 10 - Prob. 10.11QCh. 10 - Identify the two exceptions to valuing property,...Ch. 10 - In what situations is interest capitalized?Ch. 10 - Define average accumulated expenditures and...Ch. 10 - Explain the difference between the specific...Ch. 10 - Prob. 10.16QCh. 10 - Prob. 10.17QCh. 10 - Explain the accounting treatment of costs incurred...Ch. 10 - Explain the difference in the accounting treatment...Ch. 10 - Prob. 10.20QCh. 10 - Prob. 10.21QCh. 10 - Prob. 10.22QCh. 10 - Prob. 10.23QCh. 10 - Acquisition cost; machine LO101 Beavert on Lumber...Ch. 10 - Prob. 10.2BECh. 10 - Prob. 10.3BECh. 10 - Cost of a natural resource; asset retirement...Ch. 10 - Asset retirement obligation LO101 Refer to the...Ch. 10 - Prob. 10.6BECh. 10 - Prob. 10.8BECh. 10 - Prob. 10.11BECh. 10 - Nonmonetary exchange LO106 Refer to the situation...Ch. 10 - Nonmonetary exchange LO106 Refer to the situation...Ch. 10 - Prob. 10.14BECh. 10 - Prob. 10.15BECh. 10 - Research and development LO108 Maxtor Technology...Ch. 10 - Prob. 10.18BECh. 10 - Prob. 10.19BECh. 10 - Research and development; various types LO108...Ch. 10 - Prob. 10.21BECh. 10 - Acquisition cost; equipment LO101 Oaktree Company...Ch. 10 - Prob. 10.3ECh. 10 - Prob. 10.7ECh. 10 - Prob. 10.8ECh. 10 - Acquisition costs; noninterest-bearing note ...Ch. 10 - Prob. 10.11ECh. 10 - Prob. 10.14ECh. 10 - Nonmonetary exchange LO106 [This is a variation...Ch. 10 - Prob. 10.16ECh. 10 - Nonmonetary exchange LO106 [This is a variation...Ch. 10 - Prob. 10.18ECh. 10 - Prob. 10.19ECh. 10 - Prob. 10.20ECh. 10 - FASB codification research LO101, LO106, LO107,...Ch. 10 - Prob. 10.30ECh. 10 - Prob. 10.31ECh. 10 - Prob. 10.32ECh. 10 - Intangibles; start-up costs LO101, LO108 Freitas...Ch. 10 - Prob. 10.1PCh. 10 - Prob. 10.4PCh. 10 - Acquisition costs; journal entries LO101, LO103,...Ch. 10 - Prob. 10.6PCh. 10 - Prob. 10.8PCh. 10 - Prob. 10.9PCh. 10 - Judgment Case 101 Acquisition costs LO101, LO103,...Ch. 10 - Judgment Case 104 Interest capitalization LO107...Ch. 10 - Prob. 10.6DMPCh. 10 - Prob. 10.7DMPCh. 10 - Judgment Case 108 Research and development LO108...Ch. 10 - Prob. 10.9DMPCh. 10 - Prob. 10.11DMPCh. 10 - Prob. 10.13DMPCh. 10 - Prob. 10.15DMPCh. 10 - Prob. 10.16DMP
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