Peter Corporation purchased the net assets of Salim, Inc. on January 2, 2020 for $380,000 cash and also paid legal fees associated with acquisition of Salim of $15,000. Issuance expenses were $10,000. Salim, Inc. was dissolved on the date of the acquisition. Salim's balance sheet on January 2, 2020 was as follows: Accounts receivable-net $90,000 220,000 30,000 20,000 40,000 $400,000 Current liabilities Long term debt Common stock ($1 par) Addtl. paid-in capital Retained earnings Total liab. & equity $75,000 90,000 10,000 205,000 20,000 $400,000 Inventory Land Building-net Equipment-net Total assets Fair values agree with book values except for inventory, land, and equipment, which have fair values of $260,000, $35,000 and $35,000, respectively. Salim has patent rights with a fair value of $20,000. Required: Prepare Peter's general journal entry for the cash purchase of Salim's net assets.

Peter Corporation purchased the net assets of Salim, Inc. on January 2, 2020 for $380,000 cash and also paid legal fees associated with acquisition of Salim of $15,000. Issuance expenses were $10,000. Salim, Inc. was dissolved on the date of the acquisition. Salim's balance sheet on January 2, 2020 was as follows: Accounts receivable-net $90,000 220,000 30,000 20,000 40,000 $400,000 Current liabilities Long term debt Common stock ($1 par) Addtl. paid-in capital Retained earnings Total liab. & equity $75,000 90,000 10,000 205,000 20,000 $400,000 Inventory Land Building-net Equipment-net Total assets Fair values agree with book values except for inventory, land, and equipment, which have fair values of $260,000, $35,000 and $35,000, respectively. Salim has patent rights with a fair value of $20,000. Required: Prepare Peter's general journal entry for the cash purchase of Salim's net assets.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter12: Intangibles

Section: Chapter Questions

Problem 18E

See similar textbooks

Similar questions

On May 1, 2015, Zoe Inc. purchased Branta Corp. for $15,000,000 in cash. They only received $12,000,000 in net assets. In 2016, the market value of the goodwill obtained from Branta Corp. was valued at $4,000,000, but in 2017 it dropped to $2,000,000. Prepare the journal entry for the creation of goodwill and the entry to record any impairments to it in subsequent years.
On January 1, 2020, AMI Corporation purchased the non-cash net assets of Sheffield Ltd. for $8,087,900. Following is the statement of financial position of Sheffield Ltd. from the company's year-end the previous day: Sheffield Ltd.Statement of Financial PositionAs at December 31, 2019 Cash $630,000 Accounts receivable 554,000 Inventory 2,510,000 Property, plant, and equipment (net) 2,070,000 Land 2,570,000 $8,334,000 Accounts payable $324,000 Common shares 2,520,000 Retained earnings 5,490,000 $8,334,000 As part of the negotiations, AMI and Sheffield agreed on the following fair values for the items on Sheffield's statement of financial position: Accounts receivable $552,400 Inventory 2,265,000 Property, plant, and equipment 1,870,000 Land 3,620,000 Accounts payable 313,500 Prepare the journal entry on the books of AMI Corporation to record the purchase, assuming that instead of buying the net assets of…
Adams, Inc., acquires Clay Corporation on January 1, 2020, in exchange for $713,300 cash. Immediately after the acquisition, the two companies have the following account balances. Clay’s equipment (with a five-year remaining life) is actually worth $641,000. Credit balances are indicated by parentheses. Adams Clay Current assets $ 382,000 $ 272,000 Investment in Clay 713,300 0 Equipment 837,000 584,000 Liabilities (202,000 ) (224,000 ) Common stock (350,000 ) (150,000 ) Retained earnings, 1/1/20 (1,380,300 ) (482,000 ) In 2020, Clay earns a net income of $74,100 and declares and pays a $5,000 cash dividend. In 2020, Adams reports net income from its own operations (exclusive of any income from Clay) of $160,000 and declares no dividends. At the end of 2021, selected account balances for the two companies are as follows: Adams Clay Revenues $ (544,000 ) $ (286,000 ) Expenses 394,400 214,500 Investment…
Adams, Inc., acquires Clay Corporation on January 1, 2020, in exchange for $713,300 cash. Immediately after the acquisition, the two companies have the following account balances. Clay’s equipment (with a five-year remaining life) is actually worth $641,000. Credit balances are indicated by parentheses. Adams Clay Current assets $ 382,000 $ 272,000 Investment in Clay 713,300 0 Equipment 837,000 584,000 Liabilities (202,000 ) (224,000 ) Common stock (350,000 ) (150,000 ) Retained earnings, 1/1/20 (1,380,300 ) (482,000 ) In 2020, Clay earns a net income of $74,100 and declares and pays a $5,000 cash dividend. In 2020, Adams reports net income from its own operations (exclusive of any income from Clay) of $160,000 and declares no dividends. At the end of 2021, selected account balances for the two companies are as follows: Adams Clay Revenues $ (544,000 ) $ (286,000 ) Expenses 394,400 214,500 Investment…
Grand Champion Inc. purchased America’s Sweethearts Corporation on January 1, 2019. At the time, America’s Sweethearts had the following assets and liabilities (stated at fair value): Cash $63,000 Accounts receivable 137,000 Inventory 185,000 Property, plant, and equipment 300,000 Patent 65,000 Accounts payable 220,000 Notes payable 325,000 Grand Champion paid $900,000 for America’s Sweethearts. Assume that America’s Sweethearts is a reporting unit of Grand Champion. At the end of 2020, America’s Sweethearts has a fair value of $730,000 and a book value of $870,000, which includes any goodwill recorded. Of this fair value, $340,000 is attributable to identifiable assets net of (or identifiable net assets) liabilities. Required: Calculate the impairment loss of goodwill (if any) and record the appropriate journal entry.
Adams, Inc., acquires Clay Corporation on January 1, 2020, in exchange for $732,300 cash. Immediately after the acquisition, the two companies have the following account balances. Clay’s equipment (with a five-year remaining life) is actually worth $604,900. Credit balances are indicated by parentheses. Adams Clay Current assets $ 326,000 $ 290,000 Investment in Clay 732,300 0 Equipment 781,900 526,000 Liabilities (280,000 ) (170,000 ) Common stock (350,000 ) (150,000 ) Retained earnings, 1/1/20 (1,210,200 ) (496,000 ) In 2020, Clay earns a net income of $62,700 and declares and pays a $5,000 cash dividend. In 2020, Adams reports net income from its own operations (exclusive of any income from Clay) of $193,000 and declares no dividends. At the end of 2021, selected account balances for the two companies are as follows: Adams Clay Revenues $ (452,000 ) $ (272,000 ) Expenses 327,700 204,000 Investment…
On September 1, 2019, Winans Corporation acquired Aumont Enterprises for a cash payment of £800,000. At the time of purchase, Aumont’s statement of financial position showed assets of £600,000, liabilities of £200,000, and equity of £400,000. The fair value of Aumont’s assets is estimated to be £800,000. Compute the amount of goodwill acquired by Winans.
Floyd Company purchases Haeger Company for $2,400,000 cash on January 1, 2021. The book value of Haeger Company’s net assets, as reflected on its December 31, 2020 balance sheet is $1,860,000. An analysis by Floyd on December 31, 2020 indicates that the fair value of Haeger’s tangible assets exceeded the book value by $180,000, and the fair value of identifiable intangible assets exceeded book value by $135,000. How much goodwill should be recognized by Floyd Company when recording the purchase of Haeger Company?
Kirson Holdings Ltd. purchased the net assets of Baker Ltd. in January 2020 for $6,082,000. Kirson had appraisals conducted that indicated that the fair values of the assets purchased and liabilities assumed were as follows: Inventory $1,220,000 Patents $517,000 Accounts receivable 722,000 Accounts payable 595,000 Equipment 2,199,000 Bank loan payable 932,000 The patent acquired has 18 years remaining in its useful life. Kirson's management determined that it would contribute to the generation of revenues for five years, after which it would be obsolete. Determine the amount of goodwill Kirson acquired in the purchase. $4 Goodwill eTextbook and Media List of Accounts
On September 1, 2020, Blue Corporation acquired Larkspur Enterprises for a cash payment of $790,000. At the time of purchase, Larkspur's balance sheet showed assets of $630,000, liabilities of $250,000, and owners' equity of $380,000. The fair value of Larkspur's assets is estimated to be $820,000. Compute the amount of goodwill acquired by Blue. Value assigned to goodwill 80000
Zebra Company purchases Glow Inc. for $13,985,000 cash on January 1, 2023. The book value of Glow Inc. net assets reported on its December 31, 2022 statement of financial position was $12,620,000. Zebra’s December 31, 2022 analysis indicated that the fair value of Glow’s tangible assets exceeded the book value by $560,000, and the fair value of identifiable intangible assets exceeded book value by $245,000. How much goodwill should be recognized by Zebra Company when recording the purchase of Glow Inc
On September 1, 2020, Culver Corporation acquired Splish Brothers Enterprises for a cash payment of $690,000. At the time of purchase, Splish Brothers’s balance sheet showed assets of $620,000, liabilities of $240,000, and owners’ equity of $380,000. The fair value of Splish Brothers’s assets is estimated to be $860,000.Compute the amount of goodwill acquired by Culver.