Marino Company Balance Sheet January 1, 2016 1 Cash $10,000.00 Accounts payable
ID: 2472645 • Letter: M
Question
Marino Company
Balance Sheet
January 1, 2016
1
Cash
$10,000.00
Accounts payable
$30,000.00
2
Inventory
40,000.00
Notes payable
100,000.00
3
Property, plant, and equipment
200,000.00
4
Patent
20,000.00
Shareholders’ equity
140,000.00
5
$270,000.00
$270,000.00
On January 1, 2016, Paul Company purchased Marino by acquiring all its outstanding shares for $300,000 cash. On that date, the fair value of the inventory was $30,000, and the fair value of the equipment was $240,000. In addition, the fair value of a previously unrecorded customer list was $25,000. For all other amounts, the book value of January 1, 2016, equaled fair value.
Required:
CHART OF ACCOUNTSMarino CompanyGeneral Ledger
Income Tax Expense
3. Compute the goodwill associated with the purchase of Marino.
Marino Company
Balance Sheet
January 1, 2016
Explanation / Answer
Part 1
Net Assets calculation
Cash - 10,000
Inventory (fair value) - 30,000
Property, plant and equipment - 2,40,000
Patent - 20,000
Unrecorded customer - 25,000
Less:
Accounts payable - (30,000)
Notes payable - (1,00,000)
Net assets taken over - 1,95,000 [A]
Purchase consideration paid - 3,00,000 [B]
Goodwill - 1,05,000 [B-A]
Part 2 and Part3 Journal entry
Dr/Cr Particulars Dr. Cr. Dr. Cash 10,000 Dr. Inventory 30,000 Dr. Property 2,40,000 Dr. Patent 20,000 Dr. Debtors 25,000 Dr. Goodwill 1,05,000 Cr. Accounts payable 30,000 Cr. Notes payable 1,00,000 Cr. Cash paid to liquidator 3,00,000Related Questions
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