31 st Required 1 Determine the amount of goodwill that resulted from the

31 st required 1 determine the amount of goodwill

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business on Dec. 31st. Required:1.Determine the amount of goodwill that resulted from the Penlight acquisition in 2010: $________________2.Determine the amount of goodwill that Quasar should report on their Balance Sheet dated December 31, 2014.3.If an impairment loss is required, prepare the journal entry to record the loss. 7
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Part VI. (7 points)You are a financial analyst trying to compare the performance of two companies. Company A uses the double-declining-balance depreciation method. Company B uses the straight-line method. You have the following information taken from the December 31, 2014 year-end financial statements for Company B:Income StatementDepreciation Expense$ 10,000Balance SheetAssets:Plant & Equipment, at cost$ 200,000Less: Accumulated depreciation (40,000)You determine that all of the assets classified as Plant & Equipment of Company B were acquired at the same time, and that all of the $200,000 represents depreciable assets. Also, all of the depreciable assets have the same useful life and residual values are zero.Required:a.In order to compare performance with Company A, estimate what B’s book value would have been as of December 31, 2014 if the double-declining-balance depreciation method had been used by Company B since acquisition of the depreciable assets:Book Value (December 31,2014), Company B: $__________________________b.If Company B decided to switch depreciation methods in 2014 from the straight line to the double-declining-balance method, prepare the 2014 adjusting journal entry to record depreciation expense for the year endedDec 31, 2014:8
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PART VII. MULTIPLE CHOICE (3 POINTS EACH)USE THE FOLLOWING INFORMATION TO ANSWER THE NEXT (2) QUESTIONS:On January 1, 2013, ABC purchased a machine by issuing a $150,000 non-interest-bearing note with payments of principal and interest to be made at the end of each year for the next 5 years. The first payment is due on December 31, 2013. In recent transactions ABC paid 7% interest. The present value of one at 7% for 5 periods is .713; the present value of an annuity at 7% for 5 periods is 4.10. ABC recorded the machine with the following journal entry:Machine 150,000Note Payable 150,000On December 31, 2013 and 2014, when payments on the note were made, ABC debited the Note Payable and credited Cash for the full amount of the payment. No interest expense has ever been recorded on the note. Furthermore, ABC depreciated the machine using the original cost recorded on their books and applied the straight-line method assuming a 10-year life and no salvage. 1. Determine the effect of these errors on the Book Valueof the machine as of December 31, 2014.a.Over by $21,600b.Over by $24,300c.Over by $18,390d.Over by $5,400
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