Intermediate Accounting
1st Edition
ISBN: 9780132162302
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
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Question
Chapter 11, Problem 11.18BE
To determine
The amount of goodwill or gain from bargain purchase.
Given information
Book value of the assets is $7,000,000.
Amount by which assets were undervalued is $1,000,000.
Acquisition price is $7,000,000.
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Students have asked these similar questions
On September 1, 20Y8, Vernon Corporation acquired Barlow Enterprises for a cash payment of $2,300,000. At the time of acquisition, Barlow's balance sheet showed assets of $1,800,000, liabilities of $600,000, and owner's equity of $1,200,000. A recent appraisal indicated that the fair value of Barlow's assets is estimated to be $2,100,000.
How much goodwill was generated due to this acquisition?
What is the net dollar value impact this transaction had on assets?
What is the net dollar value impact this transaction had on liabilities?
What is the net dollar value impact this transaction had on equity?
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Northern
$1,052,000
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Reported liabilities
Net income for the year
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585,000
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488,000
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302,000
649,000
264,000
65,000
September 1, 2020, Winans Corporation acquired Aumont Enterprises for a cash payment of $700,000. At the time of purchase, Aumont's balance sheet showed assets of $620,000, liabilities of $200,000, and owners' equity of $420,000. The fair value of Aumont's assets is estimated to be $800,000. Compute the amount of goodwill recorded by Winans in the acquisition.
Chapter 11 Solutions
Intermediate Accounting
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