DIF: EOBJ: 922. Orbit Inc. purchased Planet Co. in 20X3. At that time an existingpatent was not recorded as a separately identified intangible asset. Atthe end of fiscal year 20X5, the patent is valued at $15,000, andgoodwill has a book value of $100,000. How should intangible assets bereported at the beginning of fiscal year 20X6?a. Goodwill $100,000Patent $0b. Goodwill $115,000Patent $0c. Goodwill $100,000Patent $15,000d. Goodwill $85,000Patent $15,000ANS: DDIF: MOBJ: 9
23. Which of the following income factors should not be factored into acalculation of goodwill?DIF: MOBJ: 10, Appendix A
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Chapter 11-8PROBLEM1. Internet Corporation is considering the acquisition of HomepageCorporation and has obtained the following audited condensed balancesheet:Homepage CorporationBalance SheetDecember 31, 20X5AssetsLiabilities and EquityCurrent assets....$ 40,000Current Liabilities..........$ 60,000Land..............20,000Capital Stock (50,000 shares,Buildings (net)...80,000$1 par value)................50,000Equipment (net)...60,000Other Paid-in Capital........20,000Retained Earnings.............70,000$200,000$200,000================Internet also acquired the following fair values for Homepage's assetsand liabilities:Current assets.........................................$ 55,000Land...................................................60,000Buildings (net)........................................90,000Equipment (net)........................................75,000Current Liabilities....................................(60,000)$220,000========Internet and Homepage agree on a price of $280,000 for Homepage's netassets. Prepare the necessary journal entry to record the purchasegiven the following scenarios:a. Internet pays cash for Homepage Corporation and incurs $5,000of direct acquisition costs.b. Internet issues its $5 par value stock as consideration. Thefair value of the stock at the acquisition date is $50 pershare. Additionally, Internet incurs $5,000 of securityissuance costs.
Chapter 1ANS:a. Current assets..........................$55,000Land....................................60,000Buildings...............................90,000Equipment...............................75,000Goodwill................................65,000Current Liabilities....................$ 60,000Cash...................................285,000b. Current assets..........................$55,000Land....................................60,000Buildings...............................90,000Equipment...............................75,000Goodwill................................65,000Current Liabilities...................$ 60,000Common Stock..........................28,000Other Paid-in Capital.................252,000Cash..................................5,000
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