Chap001_Classproblems_solu

# Chap001_Classproblems_solu - Recording a Business...

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Solutions to Chapter 1 In‐class Problems E1-18 Goodwill Assigned to Reporting Units Goodwill of \$158,000 (\$60,000 + \$48,000 + \$0 + \$50,000) should be reported, computed as follows: Reporting Unit A: Goodwill of \$60,000 should be reported. The implied value of goodwill is \$90,000 (\$690,000 - \$600,000) and the carrying amount of goodwill is \$60,000. Reporting Unit B: Goodwill of \$48,000 should be reported. The fair value of the reporting unit (\$335,000) is greater than the carrying value of the investment (\$330,000). Reporting Unit C: No goodwill should be reported. The fair value of the net assets (\$400,000) exceeds the fair value of the reporting unit (\$370,000). Reporting Unit D: Goodwill of \$50,000 should be reported. The fair value of the reporting unit (\$585,000) is greater than the carrying value of the investment (\$520,000).

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Solutions to Chapter 1 In‐class Problems E1-23
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Unformatted text preview: Recording a Business Combination Merger Expense 54,000 Deferred Stock Issue Costs 29,000 Cash 83,000 Cash 70,000 Accounts Receivable 110,000 Inventory 200,000 Land 100,000 Buildings and Equipment 350,000 Goodwill (1) 30,000 Accounts Payable 195,000 Bonds Payable 100,000 Bond Premium 5,000 Common Stock 320,000 Additional Paid-In Capital (2) 211,000 Deferred Stock Issue Costs 29,000 (1) Computation of goodwill: Purchase price (\$14 x 40,000) \$560,000 Fair value of assets acquired \$830,000 Fair value of liabilities assumed (300,000 ) Fair value of net assets acquired (530,000 ) Goodwill \$ 30,000 (2) Computation of additional paid-in capital: Market value of shares issued (\$14 x 40,000) \$560,000 Par value of shares issued (\$8 x 40,000) (320,000 ) Additional paid-in capital from issuing shares \$240,000 Stock issue costs (29,000 ) Additional paid-in capital recorded \$211,000...
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## This note was uploaded on 10/14/2009 for the course MGMT 503 taught by Professor Staff during the Spring '08 term at Purdue.

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Chap001_Classproblems_solu - Recording a Business...

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