chapter 10-2 6 Help Save& Exit Sub Check my work Johnson Corporation acquired al
ID: 2333696 • Letter: C
Question
chapter 10-2 6 Help Save& Exit Sub Check my work Johnson Corporation acquired all of the outstanding common stock of Smith Corporation for $12,680,000 in cash The book value of Smith's net assets (assets minus liabilities) was $9,200,000. The fair values of all of Smith's assets and liabilities were equal to their book values with the following exceptions: Book Value Fair Value 2,700,000 2,360,000 9,400,000 10,940,000 340,000 1,480,000 Receivables Property, plant, and equipment Intangible assets Required: es Calculate the amount paid for goodwill 8 0Explanation / Answer
Solution:
Calculation of net increase in revaluation
Goodwill
= purchase consideration - {net assets + net Increase)
= $12,680,000 - { 9,200,000 + 2,340,000 }
= $1,140,000
Book value Fair value increase/(decrease) Receivables 2,700,000 2,360,000 (340,000) Property, plant & equipment 9,400,000 10,940,000 1,540,000 Intengible assets 340,000 1,480,000 1,140,000 Net Increase 2,340,000Related Questions
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