Chapter 10 Solution - Exercise 10-6 Calculation of...

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Unformatted text preview: Exercise 10-6 Calculation of goodwill: EUR Purchase price 17,500,000 Less fair value of net assets: Assets 23,000,000 Less: Liabilities assumed (9,500,000 ) (13,500,000 ) Goodwill 4,000,000 1 Exercise 10-9 To record the acquisition of land in exchange for common stock. February 1, 2006 Land ........................................................................... 95,000 ..................................................Common stock (5,000 shares x 19) .................................................................................... 95,000 To record the acquisition of a building through purchase and donation. November 2, 2006 Building ..................................................................... 650,000 ...........................................................................Cash .......................................................................400,000 ...................... Revenue - donation of asset (difference) .......................................................................250,000 2 Exercise 10-10 Requirement 1 Tractor (6,000 cash + 18,783 present value of note) .......... 24,783 Discount on note payable (difference) ......................... 6,217 ............................................................................Cash ...........................................................................6,000 ...........................................Note payable (face amount) .........................................................................25,000 Present value of note payment: PV = 25,000 (.75131) = 18,783 P resent value of 1: n = 3, i = 10% (from Table 2) Requirement 2 EUR 2006: Interest expense ( 18,783 x 10%) = 1,878 2007: Interest expense [( 18,783 + 1,878 ) x 10%] = 2,066 Requirement 3 2006: 25,000 ( 6,217 1,878) = 20,661 2007: 25,000 ( 6,217 1,878 2,066) = 22,727 3 Exercise 10-17 1. To record the purchase of equipment on account. Equipment ( 30,000 x 98%) ........................................... 29,400 ....................................................... Accounts payable .........................................................................29,400 2. To record the acquisition of equipment in exchange for a note. Equipment (determined below) ...................................... 29,091 Discount on note payable (difference) .......................... 2,909 ...........................................Note payable (face amount) .........................................................................32,000 PV = 32,000 (.90909) = 29,091 P resent value of 1: n =1, i =10% (from Table 2) 3. To record the exchange of old equipment for new equipment. Equipment - new ( 2,500 + 24,000) ................................ 26,500 Loss ( 6,000 - 2,500) ...................................................... 3,500 Accumulated depreciation ......................................... 8,000 ............................................................................Cash .........................................................................24,000....
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This note was uploaded on 03/11/2012 for the course FIN FIN 3230 taught by Professor Petrivanov during the Spring '12 term at Kazakhstan Institute of Management, Economics and Strategic Research.

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Chapter 10 Solution - Exercise 10-6 Calculation of...

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