Advanced Financial Accounting 12th Edition by Theodore Christensen solution manual
b.
Goodwill to be reported by Prover Company:
Reporting Unit
A
B
C
Carrying value of goodwill
$70,000
$50,000)*
$40,000
Less: Impairment
(20,000)
(50,000)*
(25,000)
Goodwill to be reported at year-end
50,000
0)*
15,000
* Limited to the amount of goodwill on the reporting unit’s books.
Total goodwill to be reported at year-end:
Reporting unit A
$ 50,000
Reporting unit B
0
Reporting unit C
15,000
Total goodwill to be reported
$65,000
P1-34 Journal Entries
Journal entries to record acquisition of Steel net assets:
(1)
Merger Expense
19,000
Cash
19,000
Record finder's fee and transfer costs.
(2)
Deferred Stock Issue Costs
9,000
Cash
9,000
Record audit fees and stock registration fees.
(3)
Cash
60,000
Accounts Receivable
100,000
Inventory
115,000
Land
70,000
Buildings and Equipment
350,000
Bond Discount
20,000
Goodwill
95,000
Accounts Payable
10,000
Bonds Payable
200,000
Common Stock
120,000
Additional Paid-In Capital
471,000
Deferred Stock Issue Costs
9,000
Record merger with Steel Company.
Computation of goodwill
Fair value of consideration given (12,000 x $50)
$600,000
Fair value of net assets acquired ($695,000 - $10,000
- $180,000)
(505,000)
Goodwill
$ 95,000
Computation of additional paid-in capital
Number of shares issued
12,000
Issue price in excess of par value ($50 - $10)
x $40
Total
$480,000
Less: Deferred stock issue costs
(9,000)
Increase in additional paid-in capital
$471,000
P1-35 Purchase at More than Book Value
a. Journal entry to record acquisition of Stafford Industries net assets:
Cash
30,000
Accounts Receivable
60,000
Inventory
160,000
Land
30,000
Buildings and Equipment
350,000
Bond Discount
5,000
Goodwill
125,000
Accounts Payable
10,000
Bonds Payable
150,000
Common Stock
80,000
Additional Paid-In Capital
520,000
b. Balance sheet immediately following acquisition:
Pamrod Manufacturing and Stafford Industries
Combined Balance Sheet