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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Ch 2: Consolidation of Financial Information ACCT 501, SP 12 2 2) Prepare PICKLE’s journal entry to record its acquisition of Sugar. Current assets 2,000,000 Plant and equipment 60,000,000 Patents and copyrights 5,000,000 Brand names 1,000,000 Favorable lease agreements 600,000 Contractual customer relationships 3,000,000 Goodwill 3,400,000 Current liabilities 10,000,000 Long-term debt 40,000,000 Common Stock 500,000 APIC 14,500,000 Cash 10,000,000 Combination expenses 20,000 Cash 20,000 Additional paid-in capital 10,000 Cash 10,000
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This note was uploaded on 02/22/2012 for the course ACCT 501 taught by Professor Ma during the Spring '11 term at South Carolina.

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

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