Rock Solid Manufacturing, Inc., has acquired the net assets of Jelly Soft Manufacturing, Inc., for $10...

80.2K

Verified Solution

Question

Accounting

Rock Solid Manufacturing, Inc., has acquired the net assets ofJelly Soft Manufacturing, Inc., for $10 million and now needs toaddress how the acquisition should be recorded on its books forfinancial reporting purposes and which intangible assets must beamortized and which must be tested for impairment in thefuture.
Case Study Requirements: Given the information provided below,solve for the goodwill amount then allocate the purchase price of$10 million to the appropriate assets acquired and liabilitiesassumed in accordance with ASC 805 – Business Combinations. Thenidentify which assets are tangible and which are intangible.Identify which intangible assets must be amortized and which mustbe tested for impairment in the future.
Fair Values:
Cash - $800
Accounts receivable - $1,500
Inventory - $850
Equipment - $500
Building - $1,200
Customer relationships (finite life) - $2,300
Patents (finite life) - $600
Trademarks (indefinite life) - $400
Goodwill – (solve for)
Accounts payable - $500
Accrued payroll - $50
Note payable – bank - $950

Answer & Explanation Solved by verified expert

4.2 Ratings (562 Votes)

Difference between tangile and intangible assets The tangible asset includes fixed and current assets an intangible asset is opposite to tangible asset which includes patents trademarks copyrights etc The following are Tangible assets 1Cash 800 2Accounts receivable 1500 3Inventory 850 4Equipment 500 5Building 1200 Intangible assets are 1Customer relationships See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

Rock Solid Manufacturing, Inc., has acquired the net assets ofJelly Soft Manufacturing, Inc., for $10 million and now needs toaddress how the acquisition should be recorded on its books forfinancial reporting purposes and which intangible assets must beamortized and which must be tested for impairment in thefuture.Case Study Requirements: Given the information provided below,solve for the goodwill amount then allocate the purchase price of$10 million to the appropriate assets acquired and liabilitiesassumed in accordance with ASC 805 – Business Combinations. Thenidentify which assets are tangible and which are intangible.Identify which intangible assets must be amortized and which mustbe tested for impairment in the future.Fair Values:Cash - $800Accounts receivable - $1,500Inventory - $850Equipment - $500Building - $1,200Customer relationships (finite life) - $2,300Patents (finite life) - $600Trademarks (indefinite life) - $400Goodwill – (solve for)Accounts payable - $500Accrued payroll - $50Note payable – bank - $950