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Solution to in-class examples (Ch 2)

Solution to in-class examples (Ch 2) - Ch 2 Consolidation...

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Ch 2: Consolidation of Financial Information ACCT 501, SP 12 1. Example 1: Purchase Price > Fair Value (Subsidiary Dissolved) Required: using the acquisition method, 1) How much goodwill should be recognized? Acquisition cost $25,000,000. Book value of Sugar (5,300,000) Cost in excess of Sugar's book value $19,700,000. Differences between fair value and book value: Current assets $ (300,000) Plant and equipment, net 10,000,000. Patents and copyrights 4,000,000. Brand names 1,000,000. Favorable lease agreements 600,000. Contractual customer relationships 3,000,000. Long-term debt (2,000,000) 16,300,000 . Goodwill $ 3,400,000 .
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