Exercise 2-9 Company S has no long-term marketable securities. Assume the following scenarios: Case A Assume...
Exercise 2-9
Company S has no long-term marketable securities. Assume the
following scenarios:
Case A
Assume that P Company paid $132,200 cash for 100% of the net assets
of S Company.
|
S COMPANY |
||||||||
|
Assets |
||||||||
| Current Assets | Long-lived Assets | Liabilities | Net Assets | |||||
| Book Value | $15,440 | $80,850 | $19,720 | $76,570 | ||||
| Fair Value | 21,890 | 122,330 | 28,810 | 115,410 | ||||
Case B
Assume that P Company paid $110,970 cash for 100% of the net assets
of S Company.
|
S COMPANY |
||||||||
|
Assets |
||||||||
| Current Assets | Long-lived Assets | Liabilities | Net Assets | |||||
| Book Value | $15,440 | $80,850 | $19,720 | $76,570 | ||||
| Fair Value | 29,450 | 85,020 | 19,590 | 94,880 | ||||
Case C
Assume that P Company paid $14,930 cash for 100% of the net assets
of S Company.
|
S COMPANY |
||||||||
|
Assets |
||||||||
| Current Assets | Long-lived Assets | Liabilities | Net Assets | |||||
| Book Value | $15,440 | $80,850 | $19,720 | $76,570 | ||||
| Fair Value | 20,910 | 36,290 | 38,980 | 18,220 | ||||
Complete the following schedule by listing the amount that would be
recorded on P’s books.
| Assets | Retained Earnings | |||||||||
| Goodwill | Current Assets | Long-lived Assets | Liabilities | (Gain) | ||||||
| Case A | $ | $ | $ | $ | $ | |||||
| Case B | ||||||||||
| Case C |
Homework Answers
| Goodwill | Current Assets | Long Lived Assets | Liabilities | Retained Earnings (Gain in income statement) | |
| CASE A | 16790 | 21890 | 122330 | 28810 | |
| CASE B | 16090 | 29450 | 85020 | 19590 | |
| CASE C | 20910 | 36290 | 38980 | 3290 |
Working Note:
| Goodwill (Gain) | Purchase Price | Less: Fair value of net assets | Goodwill (Gain) |
| CASE A | 132200 | 115410 | 16790 |
| CASE B | 110970 | 94880 | 16090 |
| CASE C | 14930 | 18220 | -3290 |
Add Answer to:
Exercise 2-9
Company S has no long-term marketable securities. Assume the
following scenarios:
Case A
Assume...
Company S has no long-term marketable securities. Assume the following scenarios: Case A Assume that P...
Company S has no long-term marketable securities. Assume the following scenarios: Case A Assume that P Company paid $134,910 cash for 100% of the net assets of S Company. S COMPANY Assets Current Assets Long-lived Assets Liabilities Net Assets Book Value $14,770 $85,340 $18,920 $81,190 Fair Value 21,580 117,830 30,700 108,710 Case B Assume that P Company paid $109,090 cash for 100% of the net assets of S Company. S COMPANY Assets Current Assets Long-lived Assets Liabilities Net Assets Book...
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