Williams Roberts Cash 160,000 50,000 Inventory 550,000 160,000 Equipment 1,500,000 670,000 Totals 2,210,000 880,000 Totals Liabilities 740,000 280,000 c/s $20 par 600,000 300,000 other contr cap 375,000 105,000 retained earnings 495,000 195,000 totals 2,210,000 880,000 inventory has a FMV of 170,000 for Roberts and the...
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Accounting
Williams Roberts
Cash 160,000 50,000
Inventory 550,000 160,000
Equipment 1,500,000 670,000
Totals 2,210,000 880,000
Totals Liabilities 740,000 280,000
c/s $20par 600,000 300,000
other contrcap 375,000 105,000
retainedearnings 495,000 195,000
totals 2,210,000 880,000
inventory has a FMV of 170,000 for Roberts and the equipment hasa FMV of 715,000. The book value and FMV of liabilities are thesame. Assuming Williams wishes to acquire Roberts for cash in anasset acquisition, determine the following cutoff amounts:
- Purchase price above which Williams would record goodwill?
- Purchase price which Williams would record a 60,000 gain?
- Purchase price below which Williams would obtain abargain?
- Purchase price which Williams would record 85,000 ofgoodwill?
Williams Roberts
Cash 160,000 50,000
Inventory 550,000 160,000
Equipment 1,500,000 670,000
Totals 2,210,000 880,000
Totals Liabilities 740,000 280,000
c/s $20par 600,000 300,000
other contrcap 375,000 105,000
retainedearnings 495,000 195,000
totals 2,210,000 880,000
inventory has a FMV of 170,000 for Roberts and the equipment hasa FMV of 715,000. The book value and FMV of liabilities are thesame. Assuming Williams wishes to acquire Roberts for cash in anasset acquisition, determine the following cutoff amounts:
- Purchase price above which Williams would record goodwill?
- Purchase price which Williams would record a 60,000 gain?
- Purchase price below which Williams would obtain abargain?
- Purchase price which Williams would record 85,000 ofgoodwill?
Answer & Explanation Solved by verified expert
| ROBERTS ASSETS NET MARKET VALUE: | ||||||||||
| AMOUNT | ||||||||||
| Assets: | ||||||||||
| Cash | 50000 | |||||||||
| Inv. | 170000 | |||||||||
| Equip | 715000 | |||||||||
| Less:Liabilities | -280000 | |||||||||
| Net Assets Market Value | 655000 | |||||||||
| Req 1) Purchse price above which Williams would record goodwill = B/V of assets - Liabilities = 880000-280000= 600000 | ||||||||||
| Req 2) Purchse price which Williams would record a 60000 gain = (B/V of assets - Liabilities)-60000 = 880000-280000-60000= 540000 | ||||||||||
| Req 3) Purchse price below which Williams would obtain a bargain = Net Assets Market Value = 655000 | ||||||||||
| Req 4) Purchse price which Williams would record 85000 of goodwill = (B/V of assets - Liabilities) + 85000= 880000-280000 + 85000= 685000 | ||||||||||
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