Advanced Accounting
14th Edition
ISBN: 9781260247824
Author: Joe Ben Hoyle, Thomas F. Schaefer, Timothy S. Doupnik
Publisher: RENT MCG
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Question
Chapter 18, Problem 29P
To determine
Identify the correct option out of the given statements.
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AB is a private not-for-profit entity. It acquires YZ, another private not-for-profit entity. The acquisition value is $1 million. YZ has net assets with a book value of $600,000 but a fair value of $700,000. Officials for AB expect that YZ will be predominantly supported by contributions in the future. After the acquisition, what amount of goodwill will be reported on the combined balance sheet? Choose the correct.a. $–0–b. $100,000c. $300,000d. $400,000
Southwest is a private not-for-profit entity. It acquires Northeast, another private not-for-profit. The acquisition value is $980,000. Northeast has two assets (and no liabilities): equipment with a net book value of $120,000 but a fair value of $150,000 and a building with a net book value of $500,000 but a fair value of $800,000. Northeast expects to receive some support through donations and contributions. However, it is not expected to be predominantly supported by contributions and investment income. After the combination, what should be reported for goodwill?
$–0–
$30,000
$60,000
$360,000
Tteokguk Foundation, a governmental unit, owned an idle parcel of real estate consisting of land and factory building. Tteokguk gave the title to this realty to Jangjorim Company as an incentive for a condition that Jangjorim to establish the business operations in the area. Jangjorim paid nothing to this realty which had a fair market value of P2,000,000 at the date of grant. How would Jangjorim record this non-monetary transaction?
a.credit to unearned income from government grant for P2,000,000
b. credit to retained earnings for P2,000,000
c. memo entry only.
d. credit to donated capital for P2,000,000
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