Survey Of Accounting
5th Edition
ISBN: 9781259631122
Author: Edmonds, Thomas P.
Publisher: Mcgraw-hill Education,
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Chapter 6, Problem 34P
To determine
Calculate the amount of
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The following assets are exchanged between Company A and Company B:
Company A
Company B
Asset original cost
$53,400
$65,100
Accumulated depreciation
32,630
39,600
Net book value
20,770
25,500
Fair value of asset
24,200
28,600
In addition, Company A paid Company B $4,400 cash.Required:Prepare the journal entry to record the transaction for Company A and B
Company X purchased Company Y for $4,000,000. The net assets
of the company purchased were valued at $3,800,000.
What asset will be on Company X's balance sheet for $200,000?
Goodwill
Amortization
Not enough info
Equipment
Topic: Intangible Assets (Goodwill)
England Company assembled the following data relative to a certain entity in determining the amount to be paid for net assets and goodwill:
Assets at fair value before goodwill 2,600,000
Liabilities 900,000
Shareholders' Equity 1,700,000
Net Earnings after elimination of unusual or infrequent items:
2017 200,000
2018 230,000
2019 300,000
2020 250,000
2021 270,000
Required:
Calculate the amount of goodwill under the following:
1. Average earnings are capitalized at 10%.
2. A return of 8% is considered normal on net assets at fair value. Excess earnings are capitalized at 15%.
3. A return of 10% is considered normal on net assets at fair value. Goodwill is measured at 5 years excess earnings.
4. A return of 10% is considered…
Chapter 6 Solutions
Survey Of Accounting
Ch. 6 - 1. What is the difference between the functions of...Ch. 6 - Prob. 2QCh. 6 - Prob. 3QCh. 6 - 4. Define depreciation. What kind of asset...Ch. 6 - Prob. 5QCh. 6 - Prob. 6QCh. 6 - Prob. 7QCh. 6 - 8. Explain the historical cost concept as it...Ch. 6 - Prob. 9QCh. 6 - Prob. 10Q
Ch. 6 - Prob. 11QCh. 6 - 12. Explain straight-line, units-of-production,...Ch. 6 - Prob. 13QCh. 6 - Prob. 14QCh. 6 - Prob. 15QCh. 6 - Prob. 16QCh. 6 - 17. What is salvage value?Ch. 6 - Prob. 18QCh. 6 - Prob. 19QCh. 6 - Prob. 20QCh. 6 - Prob. 21QCh. 6 - 22. Why would a company choose to depreciate one...Ch. 6 - Prob. 23QCh. 6 - 27. How are capital expenditures made to improve...Ch. 6 - Prob. 25QCh. 6 - Prob. 26QCh. 6 - Prob. 27QCh. 6 - Prob. 28QCh. 6 - Prob. 1ECh. 6 - Prob. 2ECh. 6 - Prob. 3ECh. 6 - Prob. 4ECh. 6 - Prob. 5ECh. 6 - LO 8-1 Exercise 8-6 A Allocating costs for a...Ch. 6 - Effect of depreciation on the accounting equation...Ch. 6 - Prob. 8ECh. 6 - Prob. 9ECh. 6 - Prob. 10ECh. 6 - Events related to the acquisition, use, and...Ch. 6 - Prob. 12ECh. 6 - Prob. 13ECh. 6 - Prob. 14ECh. 6 - Prob. 15ECh. 6 - Prob. 16ECh. 6 - Prob. 17ECh. 6 - Prob. 18ECh. 6 - Prob. 19ECh. 6 - Prob. 20ECh. 6 - Prob. 21ECh. 6 - Accounting for acquisition of assets, including a...Ch. 6 - Calculating depreciation expense using three...Ch. 6 - Determining the effect of depreciation expense on...Ch. 6 - Prob. 25PCh. 6 - Prob. 26PCh. 6 - Prob. 27PCh. 6 - Prob. 28PCh. 6 - Revision of estimated salvage value Delta Machine...Ch. 6 - Purchase and use of tangible asset: Three...Ch. 6 - Recording continuing expenditures for plant assets...Ch. 6 - Prob. 32PCh. 6 - Prob. 33PCh. 6 - Prob. 34PCh. 6 - Prob. 35PCh. 6 - Performing ratio analysis using real-world data...Ch. 6 - Prob. 1ATCCh. 6 - ATC 6-3 Research Assignment Comparing Microsofts...Ch. 6 - Prob. 4ATCCh. 6 - ATC 6-5 Ethical Dilemma Whats an expense? Several...
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- K First Company purchased Second Company for $20,000,000 cash. At the time of purchase, Second Company's assets had a market value of $30,000,000 and the liabilities had a market value of $19,000,000. At the time of purchase, Second Company's assets had a book value of $12,000,000 and the liabilities had a book value of $8,000,000. What amount of goodwill is recorded? OA. $19,000,000 OB. $10,000,000 OC. $11,000,000 O D. $9,000,000 Garrow_forwardPreston Company acquired the assets (except for cash) and assumed the liabilities of Saville Company. Immediately prior to the acquisition, Saville Company’s balance sheet was as follows: Book Value Fair Value Cash $129,480 $129,480 Receivables (net) 177,290 209,150 Inventory 362,130 412,850 Plant and equipment (net) 485,520 490,050 Land 440,090 647,770 Total assets $1,594,510 $1,889,300 Current Liabilities $586,310 $568,060 Common stock ($5 par value) 486,050 Other contributed capital 122,210 Retained earnings 399,940 Total equities $1,594,510 (a) Prepare the journal entries on the books of Preston Company to record the purchase of the assets and assumption of the liabilities of Saville Company if the amount paid was $1,428,550 in cash. (If no entry is required, select "No Entry" for the account titles and enter 0 for the…arrow_forwardMainline Produce Corporation acquired all the outstanding common stock of Iceberg Lettuce Corporation for $30,000,000 in cash. The book values and fair values of Iceberg's assets and liabilities were as follows: Current assets Property, plant, and equipment Other assets Current liabilities Long-term liabilities Required: 1. Calculate the amount paid for goodwill. 2. Determine the financial statement effects of the acquisition. Required 1 Required 2 Complete this question by entering your answers in the tabs below. Book Value $ 11,400,000 20,200,000 3,400,000 7,800,000 13,200,000 Assets Determine the financial statement effects of the acquisition. Note: Amounts to be deducted should be indicated with a minus sign. Enter your answer in millions rounded to 1 decimal place. (i.e. 5,500,000 should be entered as 5.5). Accounts Payable Accounts Receivable Accumulated Depreciation Advertising Expense Fair Value $ 14,400,000 26,200,000 4,400,000 7,800,000 12,200,000 Balance Sheet Liabilities…arrow_forward
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- On August 1, Hyde, Inc. exchanged productive assets with Wiggins, Inc. Hyde's asset is referred to below as "Asset A," and Wiggins' is referred to as "Asset B." The following facts pertain to these assets.Asset AOriginal Cost $96,000Accumulated Depreciation (to date of exchange) $40,000Fair Value at date of exchange $60,000Cash paid by Hyde, Inc $15,000Asset BOriginal Cost $110,000Accumulated Depreciation (to date of exchange) $47,000Fair Value at date of exchange $75,000Cash paid by Hyde, Inc $15,000Instructions:(a) Assuming that the exchange of Assets A and B has commercial substance, record the exchange for both Hyde, Inc. and Wiggins, Inc. in accordance with generally accepted accounting principles.(b) Assuming that the exchange of Assets A and B lacks commercial substance, record the exchange for both Hyde, Inc. and Wiggins, Inc. in accordance with generally accepted accounting principles.arrow_forwardFirst Company purchased Second Company for $19,000,000 cash. At the time of purchase, Second Company's assets had a market value of $28,000,000 and the liabilities had a market value of $13,000,000. At the time of the purchase, Second Company's assets had a book value of $15,000,000, and the liabilities had a book value of $9,000,000. What amount of goodwill is recorded?arrow_forwardSituation 1: Minmin Company made the following individual cash purchases: Land and building Machinery and office equipment Delivery equipment An appraisal disclosed the following fair values: Land Building Machinery Office equipment Delivery equipment P 6,000,000 1,800,000 500,000 Land Building Machinery P 1,000,000 3,000,000 800,000 400,000 350,000 Situation 2: Afable Company acquired the assets of another entity with the following fair value: P 1,000,000 5,000,000 2,000,000 The entity issued 60,000 shares with P100 par value in exchange. The share had a quoted price of P150 on the date of purchase of the property.arrow_forward
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