Question

Pringle Corporation acquires Snax Company at an acquisition cost of $50,000,000. Assets and liabilities of Snax...

  1. Pringle Corporation acquires Snax Company at an acquisition cost of $50,000,000. Assets and liabilities of Snax are as follows:

Book Value

Fair Value

Current assets

$ 1,500,000

$     800,000

Land, buildings, and equipment (net)

16,000,000

7,000,000

Brand names

-0-

8,000,000

Liabilities

12,000,000

11,500,000

                             

               Goodwill arising from this acquisition is:

               a.   $45,700,000

               b.   $44,500,000

               c.   $20,500,000

               d.   $22,700,000

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Fair Value of Assets

= Current Assets + Land, Buildings and Equipment (net) + Brand Names

= $800,000 + $7,000,000 + $8,000,000

= 15,800,000

Fair Value of Liabilities = $11,500,000

Fair Value of Net Assets

= Fair Value of Assets - Fair Value of Liabilities

= $15,800,000 - $11,500,000

= $4,300,000

Cost of Acquisition of Business = $50,000,000

Goodwill arising from acquisition

= Cost of acquisition - Fair Value of Net Assets

= $50,000,000 - $4,300,000

= $45,700,000

Correct Option: a. $45,700,000

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Pluto Corporation purchased Saturn Corporation’s assets and liabilities for $4,500,000 in cash. Saturn's reported assets and...
Pluto Corporation purchased Saturn Corporation’s assets and liabilities for $4,500,000 in cash. Saturn's reported assets and liabilities have the following fair values at the date of acquisition:                Fair Value Dr (Cr) Cash, receivables $ 5,000,000 Inventory 7,000,000 Land and buildings 30,000,000 Liabilities     (40,000,000) Saturn also has brand names, with a fair value of $4,000,000, that are not reported on its balance sheet. a. Using a t-account template: Prepare the acquisition entry assuming that Pluto is treating this transaction...
Precision Company acquires all of Springfield Company's voting stock for $5,000,000 in cash. Information on Springfield's...
Precision Company acquires all of Springfield Company's voting stock for $5,000,000 in cash. Information on Springfield's assets and liabilities at the date of acquisition is as follows: Book Value Dr (Cr) Fair Value Dr (Cr) Current assets $ 500,000 $ 700,000 Land, buildings and equipment (net) 2,000,000 3,500,000 Liabilities (600,000) (550,000) Capital stock (500,000) Retained earnings (1,400,000) In addition, Springfield Company has unrecorded identifiable intangible assets, in the form of brand names and lease agreements, with a total estimated fair...
On January 1, 20X1, Honey Bee Corporation purchased the net assets of Green Hornet Company for...
On January 1, 20X1, Honey Bee Corporation purchased the net assets of Green Hornet Company for $1,500,000. On this date, a condensed balance sheet for Green Hornet showed: Book Fair Value Value Current Assets $ 500,000 $800,000 Long-Term Investments in Securities 200,000 150,000 Land 100,000 600,000 Buildings (net) 700,000 900,000 $1,500,000 Current Liabilities $ 300,000 $300,000 Long-Term Debt 550,000 600,000 Common Stock (no-par) 300,000 Retained Earnings 350,000 $1,500,000 Required: Record the entry on Honey Bee's books for the acquisition of...
Allerton Company acquires all of Deluxe Company’s assets and liabilities for cash on January 1, 2018,...
Allerton Company acquires all of Deluxe Company’s assets and liabilities for cash on January 1, 2018, and subsequently formally dissolves Deluxe. At the acquisition date, the following book and fair values were available for the Deluxe Company accounts: Book Values Fair Values Current assets $ 20,250 $ 20,250 Building 110,250 65,150 Land 17,250 28,550 Trademark 0 34,600 Goodwill 37,500 ? Liabilities (50,250 ) (50,250 ) Common stock (100,000 ) Retained earnings (35,000 ) 1&2. Prepare Allerton’s entry to record its...
Grant Company acquired all of Bedford Corporation's assets and liabilities on January 1, 20X2, in a...
Grant Company acquired all of Bedford Corporation's assets and liabilities on January 1, 20X2, in a business combination. At that date, Bedford reported assets with a book value of $637,000 and liabilities of $375,000. Grant noted that Bedford had $41,000 of capitalized research and development costs on its books at the acquisition date that did not appear to be of value. Grant also determined that patents developed by Bedford had a fair value of $122,000 but had not been recorded...
ackson Company acquires 100% of the stock of Clark Corporation on January 1, 2020, for $4,100...
ackson Company acquires 100% of the stock of Clark Corporation on January 1, 2020, for $4,100 cash. As of that date Clark has the following trial balance: Debit Credit Cash $ 500 Accounts receivable 600 Inventory 900 Buildings (net) (5 year life) 1,600 Equipment (net) (2 year life) 1,000 Land 900 Accounts payable $ 400 Long-term liabilities (due 12/31/22) 1,900 Common stock 1,000 Additional paid-in capital 700 Retained earnings 1,500 Total $ 5,500 $ 5,500 Net income and dividends reported...
Jackson Company acquires 100% of the stock of Clark Corporation on January 1, 2020, for $4,100...
Jackson Company acquires 100% of the stock of Clark Corporation on January 1, 2020, for $4,100 cash. As of that date Clark has the following trial balance: Debit Credit Cash $ 500 Accounts receivable 600 Inventory 900 Buildings (net) (5 year life) 1,600 Equipment (net) (2 year life) 1,000 Land 900 Accounts payable $ 400 Long-term liabilities (due 12/31/22) 1,900 Common stock 1,000 Additional paid-in capital 700 Retained earnings 1,500 Total $ 5,500 $ 5,500 Net income and dividends reported...
llerton Company acquires all of Deluxe Company’s assets and liabilities for cash on January 1, 2018,...
llerton Company acquires all of Deluxe Company’s assets and liabilities for cash on January 1, 2018, and subsequently formally dissolves Deluxe. At the acquisition date, the following book and fair values were available for the Deluxe Company accounts: Book Values Fair Values Current assets $ 46,750 $ 46,750 Building 100,750 57,850 Land 15,750 35,350 Trademark 0 38,000 Goodwill 23,000 ? Liabilities (51,250 ) (51,250 ) Common stock (100,000 ) Retained earnings (35,000 ) 1&2. Prepare Allerton’s entry to record its...
Allerton Company acquires all of Deluxe Company’s assets and liabilities for cash on January 1, 2018,...
Allerton Company acquires all of Deluxe Company’s assets and liabilities for cash on January 1, 2018, and subsequently formally dissolves Deluxe. At the acquisition date, the following book and fair values were available for the Deluxe Company accounts: Book Values Fair Values Current assets $ 51,500 $ 51,500 Building 92,750 44,250 Land 27,000 43,000 Trademark 0 39,000 Goodwill 21,000 ? Liabilities (57,250 ) (57,250 ) Common stock (100,000 ) Retained earnings (35,000 ) 1&2. Prepare Allerton’s entry to record its...
Parkland buys all of Sander Company’s assets and liabilities. Sander’ balance sheet at the date of...
Parkland buys all of Sander Company’s assets and liabilities. Sander’ balance sheet at the date of acquisition, including fair value information on its reported assets and liabilities, is as follows: Book Value Dr (Cr) Fair Value Dr (Cr) Assets Cash, receivables $   1,000,000 $     950,000 Inventories 5,000,000 4,000,000 Property and equipment 60,000,000 45,000,000 Total assets $ 66,000,000 Liabilities & Equity Accounts and notes payable $ 30,000,000 29,000,000 Common stock 500,000 Additional paid-in capital 15,000,000 Retained earnings 20,500,000 Total liabilities and...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT