Horngren's Financial & Managerial Accounting, The Financial Chapters (Book & Access Card)
5th Edition
ISBN: 9780134078939
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Videos
Question
Chapter 9, Problem 9.34AP
1.
To determine
To Journalize: the purchase of S Company by M Company.
2.
To determine
To name: the special asset that M Company’s acquisition of S Company identifies.
To determine
To explain: the accounting of goodwill after acquiring S Company.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Accounting for intangibles
Core Telecom provides communication services in Iowa, Nebraska, the Dakotas, and Montana. Core purchased goodwill as part of the acquisition of Surety Wireless Company, which had the following figures:
Requirements
Journalize the entry to record Core’s purchase of Surety Wireless for $280,000 cash plus a $420,000 note payable.
What special asset does Core’s acquisition of Surety Wireless identify? How should Core Telecom account for this asset after acquiring Surety Wireless? Explain in detail.
Intangibles: Balance Sheet Presentation and Income Statement Effects
Clinton Company has provided information on intangible assets as follows:
A patent was purchased from Lou Company for $1,680,000 on January 1, 2018. Clinton estimated the remaining useful life of the patent to be 10 years. The patent was carried in Lou's accounting records at a net book value of $1,440,000 when Lou sold it to Clinton.
During 2019, a franchise was purchased from Rink Company for $500,000. In addition, 6% of revenue from the franchise must be paid to Rink. Revenue from the franchise for 2019 was $1,800,000. Clinton estimates the useful life of the franchise to be 10 years and takes a full year's amortization in the year of purchase.
Clinton incurred R&D costs in 2019 as follows:
Materials and equipment
$125,000
Personnel
162,000
Indirect costs
78,000
$365,000
Clinton estimates that these costs will be recouped by December 31, 2020.
On January 1, 2019, Clinton estimates, based on new…
Accounting for intangibles
Midland States Telecom provides communication services in Iowa, Nebraska, the Dakotas, and Montana. Midland States Telecom purchased goodwill as part of the acquisition of Sheldon Wireless Enterprises, which had the following figures:
Requirements
Journalize the entry to record Midland States Telecom’s purchase of Sheldon Wireless for $440,000 cash plus a $660,000 note payable.
What special asset does Midland States Telecom’s acquisition of Sheldon Wireless identify? How should Midland States Telecom account for this asset after acquiring Sheldon Wireless? Explain in detail.
Chapter 9 Solutions
Horngren's Financial & Managerial Accounting, The Financial Chapters (Book & Access Card)
Ch. 9 - Prob. 1QCCh. 9 - Prob. 2QCCh. 9 - Which method almost always produces the most...Ch. 9 - A Celty Airline jet costs 28,000,000 and is...Ch. 9 - A copy machine costs 45,000 when new and has...Ch. 9 - Suppose Print and Photo Center in the preceding...Ch. 9 - Prob. 7QCCh. 9 - Prob. 8QCCh. 9 - Liberty Corporation reported beginning and ending...Ch. 9 - A truck costs 50,000 when new and has accumulated...
Ch. 9 - Prob. 1RQCh. 9 - Prob. 2RQCh. 9 - Prob. 3RQCh. 9 - Prob. 4RQCh. 9 - Prob. 5RQCh. 9 - What is the difference between a capital...Ch. 9 - Prob. 7RQCh. 9 - Prob. 8RQCh. 9 - How does a business decide which depreciation...Ch. 9 - Prob. 10RQCh. 9 - Prob. 11RQCh. 9 - Prob. 12RQCh. 9 - Prob. 13RQCh. 9 - How is gain o r loss determined when disposing of...Ch. 9 - Prob. 15RQCh. 9 - Prob. 16RQCh. 9 - Prob. 17RQCh. 9 - Prob. 18RQCh. 9 - Prob. 19RQCh. 9 - What does it mean if an exchange of plant assets...Ch. 9 - Determining the cost of an asset Alton Clothing...Ch. 9 - Prob. 9.2SECh. 9 - Prob. 9.3SECh. 9 - Computing second-year depreciation and accumulated...Ch. 9 - Calculating partial-year depreciation On September...Ch. 9 - Prob. 9.6SECh. 9 - Prob. 9.7SECh. 9 - Discarding an asset On May 31, 2016, Choice...Ch. 9 - Selling an asset at gain or loss Mill Creek Golf...Ch. 9 - Selling an asset at gain or loss Pelman Company...Ch. 9 - Accounting for depletion of natural resources...Ch. 9 - Accounting for an intangible asset On March 1,...Ch. 9 - Prob. 9.13SECh. 9 - Prob. 9.14SECh. 9 - Prob. 9.15SECh. 9 - Prob. 9.16SECh. 9 - Prob. 9.17ECh. 9 - Making a lump-sum purchase of assets Dearwood...Ch. 9 - Prob. 9.19ECh. 9 - Computing depreciation-three methods Crackling...Ch. 9 - Changing an asset's useful life and residual value...Ch. 9 - Recording partial-year depreciation and sale of an...Ch. 9 - Prob. 9.23ECh. 9 - Prob. 9.24ECh. 9 - Prob. 9.25ECh. 9 - Prob. 9.26ECh. 9 - Computing asset turnover ratio Snap Dragon Photo...Ch. 9 - Prob. 9.28ECh. 9 - Measuring asset cost, units-of-production...Ch. 9 - Prob. 9.30APCh. 9 - Determining asset cost, recording first-year...Ch. 9 - Recording lump-sum asset purchases, depreciation,...Ch. 9 - Prob. 9.33APCh. 9 - Prob. 9.34APCh. 9 - Journalizing partial-year depreciation and asset...Ch. 9 - Prob. 9.36BPCh. 9 - Determining asset cost, recording rust-year...Ch. 9 - Recording lump-sum asset purchases, depreciation,...Ch. 9 - Prob. 9.39BPCh. 9 - Prob. 9.40BPCh. 9 - Journalizing partial-year depreciation and asset...Ch. 9 - Prob. 9.42CPCh. 9 - Western Bank Trust purchased land and a building...Ch. 9 - Prob. 9.1CTFCCh. 9 - Prob. 9.1CTFSCCh. 9 - In 150 words or fewer, explain the different...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Heartland Telecom provides communication services in Iowa, Nebraska, the Dakotas, and Montana. Heartland Telecom purchased goodwill as part of the acquisition of Samson Wireless Enterprises, which had the following figures: Data table: Book value of assets $800,000 Market value of assets 900,000 Market value of liabilities 510,000 Requirements: 1. Journalize the entry to record Heartland Telecom's purchase of SamsonSamson Wireless for $400,000cash plus a $600,000 note payable. 2. What special asset does Heartland Telecom'sHeartland Telecom's acquisition of SamsonSamson Wirelessidentify? How should HeartlandHeartland Telecom account for this asset after acquiring SamsonSamson Wireless? Explain in detail.arrow_forwardRecording Asset Exchanges Minneapolis Inc. has equipment with an original cost of $84,000 and accumulated depreciation of $48,000. This equipment was traded in for new equipment with a list price of $96,000. The new machine can be purchased without a trade-in for $90,000 cash. The difference between the fair value of the new asset and the market value of the old asset will be paid in cash. Prepare the entry to record acquisition of the new machine under each of the following separate cases. a. The new machine is purchased for cash with no trade-in. b. The transaction has commercial substance. The old equipment is traded in, and $60,000 cash is paid. c. The same as in part b except that the transaction lacks commercial substance. a. Account Name Dr. Cr. Answer Answer Answer Answer Answer Answer b. Account Name Dr. Cr. Equipment (new) Answer Answer Accumulated Depreciation Answer Answer Answer Answer Answer Answer Answer Answer Equipment (old) Answer…arrow_forwardIntangibles: Balance Sheet Presentation and Income Statement Effects Valen Company has provided information on intangible assets as follows: A patent was purchased from Lou Company for $1,215,000 on January 1, 2018. Valen estimated the remaining useful life of the patent to be 15 years. The patent was carried in Lou's accounting records at a net book value of $955,000 when Lou sold it to Valen. During 2019, a franchise was purchased from Rink Company for $430,000. In addition, 4% of revenue from the franchise must be paid to Rink. Revenue from the franchise for 2019 was $2,100,000. Valen estimates the useful life of the franchise to be 10 years and takes a full year's amortization in the year of purchase. Valen incurred R&D costs in 2019 as follows: Materials and equipment $108,000 Personnel 133,000 Indirect costs 78,000 $319,000 Valen estimates that these costs will be recouped by December 31, 2020. On January 1, 2019, Valen estimates, based on new events, that the…arrow_forward
- how How can due entries? Intangibles: Balance Sheet Presentation and Income Statement Effects Bringle Company has provided information on intangible assets as follows: A patent was purchased from Lou Company for $1,845,000 on January 1, 2018. Bringle estimated the remaining useful life of the patent to be 15 years. The patent was carried in Lou's accounting records at a net book value of $1,635,000 when Lou sold it to Bringle. During 2019, a franchise was purchased from Rink Company for $470,000. In addition, 6% of revenue from the franchise must be paid to Rink. Revenue from the franchise for 2019 was $2,000,000. Bringle estimates the useful life of the franchise to be 5 years and takes a full year's amortization in the year of purchase. Bringle incurred R&D costs in 2019 as follows: Materials and equipment $150,000 Personnel 130,000 Indirect costs 69,000 $349,000 Bringle estimates that these costs will be recouped by December 31, 2020. On January 1, 2019,…arrow_forwardRecording Asset Exchanges Minneapolis Inc. has equipment with an original cost of $52,500 and accumulated depreciation of $30,000. This equipment was traded in for new equipment with a list price of $60,000. The new machine can be purchased without a trade-in for $56,250 cash. The difference between the fair value of the new asset and the market value of the old asset will be paid in cash. Prepare the entry to record acquisition of the new machine under each of the following separate cases. a. The new machine is purchased for cash with no trade-in. b. The transaction has commercial substance. The old equipment is traded in, and $37,500 cash is paid. c. The same as in part b except that the transaction lacks commercial substance. a. Account Name Dr. Cr. AnswerCashPrepaid InsuranceEquipmentBuildingLandConstruction in ProcessAccumulated DepreciationAccounts PayableProperty Tax PayableAsset Retirement ObligationNote PayableDiscount on Note…arrow_forwardRecording Asset Exchanges Minneapolis Inc. has equipment with an original cost of $52,500 and accumulated depreciation of $30,000. This equipment was traded in for new equipment with a list price of $60,000. The new machine can be purchased without a trade-in for $56,250 cash. The difference between the fair value of the new asset and the market value of the old asset will be paid in cash. Prepare the entry to record acquisition of the new machine under each of the following separate cases. a. The new machine is purchased for cash with no trade-in. b. The transaction has commercial substance. The old equipment is traded in, and $37,500 cash is paid. c. The same as in part b except that the transaction lacks commercial substance. a. Account Name Dr. Cr. Answer Answer b. Account Name Dr. Cr. Answer Answer Answer Answer Answer Answer Answer Answer C. Account Name Dr. Cr. Answer…arrow_forward
- Acquisition Cost of Long-Lived Asset The following data relate to a firm’s purchase of a machine used in the manufacture of its product: Invoice price $22,000 Applicable sales tax 1,400 Cash discount taken for prompt payment 600 Freight paid 460 Cost of insurance coverage on machine while in transit 325 Installation costs 1,200 Testing and adjusting costs 675 Repair of damages to machine caused by the firm's employees 750 Prepaid maintenance contract for first year of machine's use 500 Determine the acquisition cost of the machine.Acquisition Cost = $Answer PreviousSave AnswersNextarrow_forwardMAP Ltd acquired a Machine from FAT Ltd for the following consideration:o Cash $65 000,o Land in the books of MAP Ltd the land is recorded at its cost of $750 000.It has a fair value of $700 000.MAP Ltd also agrees to assume the liability of the FAT Ltd bank loan of $95 000 as part ofthe Machine acquistion Calculate the acquisition cost of the Machine Provide the journal entries that would appear in MAP Ltd.’s books to accountfor the acquisition of the Machine.arrow_forwardacquisition Cost of Long-Lived Asset The following data relate to a firm’s purchase of a machine used in the manufacture of its product: Invoice price $34,000 Applicable sales tax 2,000 Cash discount taken for prompt payment 400 Freight paid 260 Cost of insurance coverage on machine while in transit 125 Installation costs 2,000 Testing and adjusting costs 475 Repair of damages to machine caused by the firm’s employees 750 Prepaid maintenance contract for first year of machine’s use 400 Determine the acquisition cost of the machine.Acquisition Cost = $Answerarrow_forward
- Acquisition Cost of Long-Lived Asset The following data relate to a firm’s purchase of a machine used in the manufacture of its product: Invoice price $34,000 Applicable sales tax 2,000 Cash discount taken for prompt payment 400 Freight paid 260 Cost of insurance coverage on machine while in transit 125 Installation costs 2,000 Testing and adjusting costs 475 Repair of damages to machine caused by the firm’s employees 750 Prepaid maintenance contract for first year of machine’s use 400 Determine the acquisition cost of the machine.arrow_forwardAccounting Sleepy Ltd negotiated a purchase of land, building and equipment from Bambi Corp. The purchase was completed on June 28, 2021 at a total cash cost of $800,000. The estimated market value of each asset at the time was: land, $330,000; building, $520,000; and machinery, $150,000. Required: 1. Prepare journal entries to record each of the purchase of the assets on June 28, 2021. 2. How much depreciation will be recorded for the December 31, 2021 year end assuming declining balance depreciation years and 5 years on the machinery? Company policy is to start depreciating assets at the beginning of the month following acquisition. on the building over 40arrow_forwardDynamo Manufacturing paid cash to acquire the assets of an existing company. Among the assets acquired were the following items: Patent with 4 remaining years of legal life Goodwill Required: a. Compute the annual amortization expense for these items. $ 39,800 44,000 b. Record the acquisition of the intangible assets and the related amortization expense for Year 1 in a horizontal statements model. Complete this question by entering your answers in the tabs below. Required A Required B Record the acquisition of the intangible assets and the related amortization expense for Year 1 in a horizontal statements model. Note: In the Statement of Cash Flows column, use the initials OA to designate operating activity, IA for investing activity, and FA for financing activity. Enter any decreases to outflows with a minus sign. Not all cells require input. Round final answers to the nearest whole dollar amount. DYNAMO MANUFACTURING Horizontal Statements Model Balance Sheet Income Statement…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax CollegeCentury 21 Accounting Multicolumn JournalAccountingISBN:9781337679503Author:GilbertsonPublisher:Cengage
Financial Reporting, Financial Statement Analysis...FinanceISBN:9781285190907Author:James M. Wahlen, Stephen P. Baginski, Mark BradshawPublisher:Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Century 21 Accounting Multicolumn Journal
Accounting
ISBN:9781337679503
Author:Gilbertson
Publisher:Cengage
Financial Reporting, Financial Statement Analysis...
Finance
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:Cengage Learning
Property, Plant and Equipment (PP&E) - Introduction to PPE; Author: Gleim Accounting;https://www.youtube.com/watch?v=e_Hx-e-h9M4;License: Standard Youtube License