On January 1, 2021, WATER Corporation purchased 80% of the control of FIRE Corporation. The separatefinancial statements on the date of business combination showed the following:Current AssetsLandPlant AssetsAccumulated DepreciationInvestment in SubsidiaryTOTALSAccounts PayableOrdinary Share CapitalRetained EarningsTOTALSWATER210,00031,200280,000(96,000)286,500711,700102,400419,700189,600711,700FIRE65,000108,000210,000(24,000)359,00057,000162,000140,000359,000On the date of acquisition, the net assets of FIRE are fairly valued except for receivables that should bewritten down by P6,500. The NCI is measured at their proportionate share on the fair value of FIRE's netassets.Determine the amount of Goodwill to be recognized in the consolidated balance sheet at the date ofacquisition.

Goodwill refers to the positive difference between the purchase consideration paid by the parent…

Answered: Determine the amount of Goodwill to be…

Business

Accounting

Determine the amount of Goodwill to be recognized in the consolidated balance sheet at the date of acquisition.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Benjamin Inc. and Victor Inc. agreed to combine as of January 1, 2023. The book value and fair value of Victor's accounts on that date (prior to creating the combination) follow, along with the book value of Benjamin's accounts: Current assets Building and equipment (net) Liabilities Common Stock Additional paid-in capital Retained earnings, 1/1/2023 O $200,000. Benjamin Book Value $50,000. O $70,000. O $90,000. Victor Book Value $420,000 $170,000 $230,000 790,000 410.000 480,000 620,000 380,000 380,000 400,000 90,000 Victor Fair Value 70,000 30,000 120,000 80,000 Assume that Benjamin issued 10,000 shares of common stock with a $5 par value and a $40 fair value to obtain all of Victor's outstanding stock. In addition, Benjamin paid legal costs of $8,000 in connection with the acquisition and $4,000 in stock issue costs, which is not yet reflected in the information above. On its acquisition-date consolidated balance sheet, what amount should Beaver report as goodwill?
On October 6, 2021, Dark Company acquired 70% of the common stock of Knight Company. The separate statement of financial position of the two companies on that date showed the following: DARK KNIGHT Ccash Accounts Receivable Inventory Land Plant Assets Accumulated Depreciation Investment in KNIGHT Company TOTALS Accounts Payable Capital Stock Retained Earnings TOTALS 24,000 144,000 132,000 68,000 700,000 (240,000) 402,000 1,230,000 206,000 800,000 224,000 1,230,000 206,000 26,000 83,000 32,000 300,000 (60,000) 587,000 142,000 345,000 100,000 587,000 The book values of all assets and liabilities for KNIGHT company equaled to fair values, except for the inventory with a fair value of 55,000. The fair value of the NCI is 150,000. The total assets on the date of business combination to be presented in the consolidated financial statements is
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On January 2, 2021, the Statement of Financial Position of Parent and Subsidiary Company prior to the combination are: Parent Co. Subsidiary Co. Cash P 450,000 P 15,000 Inventories 300,000 30,000 Property and equipment (net) 750,000 105,000 Total Assets P 1,500,000 P 150,000 Current Liabilities P 90,000 P 15,000 Common Stock, P100 par 150,000 15,000 Additional Paid in Capital 450,000 30,000 Retained Earnings 810,000 90,000 Total Liabilities and Stockholders' Equity P 1,500,000 P 150,000 The fair value of Subsidiary Company's equipment is P153,000. Assuming Parent Company acquired 80% of the outstanding common stock of Subsidiary Company for P136,800 and NCI is measured at its proportionate share of subsidiary's net assets, how much is the consolidated stockholder's equity on the date of acquisition?
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On August 31, 2020, Southampton Co. acquired all of the common stock of Brighton Company, which became a division of Southampton Co. Brighton Company reported the followir statement of financial position at the time of the acquisition: Brighton Company Statement of Financial Position Assets Equity and Liabilities Share capital- Plant assets (ne t) $1,350,000 $1,150,000 ordinary 235,000 Retained earnings Inventory Receivables 1,070,000 587.000 800,000 Accounts payable Cash 422.000 Total assets $2.807.000 Total equity and liabilities $2.807.000 An appraisal indicated that the fair value of the inventory was $372,000 and the fair value of the plant assets was $1,550,000. The agreed purchase price was $3,600,000, and this amount was paid in cash to the previous owners of Brighton Company. Required: a. Prepare the entry to record the purchase of Brighton Company. b. Assume that the carrying amount of Brighton Company division's net assets, including goodwill is $2.550,000. The recoverable…
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The following are summarized Balance Sheets as on March 31, 2020 H. Ltd. acquired 80% shares in S Ltd. on October 1, 2019 for $ 2,000. At the date of acquisitionall the assets and liabilities of S Ltd were reflected at fair valueThe Retained earnings of S Ltd. on April 1, 2019 was $ 200H Ltd measures the Non Controlling Interest at its proportionate share of the acquiree's netidentifiable assets.S Ltd transferred goods to H Ltd at a transfer price of $ 300. The sales policy of H Ltd is to add50 % of mark up to its cost. Two-thirds remained in inventory at the year end. Required : Calculate goodwill at the date of acquisition and unrealized profit for holding company
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