1 Long-Term Operating Assets: Acquisition, Cost Allocation, and Derecognition 2 Goodwill and Bargain Purchase Computations 3 4 The trial balance for the Dark Horse Company follows: 5 6 7 Description Cash Debit Credit $ 30,000 8 Inventory 100,000 9 Property, plant, and equipment - Net 370,000 10 Current liabilities $ 50,000 11 Common stock-No par 150,000 12 Retained earnings 300,000 13 14 Totals $ 500,000 $500,000 15 MPL, Inc. offers to acquire Dark Horse. The additional information is given below: 16 (Requirement 1 assumption) Purchase price S 650,000 17 Purchase price $ 250,000 18 (Requirement 2 assumption) 19 Fair market value of the inventory $ 180,000 20 The plant assets were undervalued by $ 50,000 22 Use the blue shaded areas on the ENTERANSWERS tab for inputs. Always use cell references and formulas where appropriate to receive full credit. If you copy/paste from the Instructions 23 tab you will be marked wrong. 24 25 Requirements 26 1 2 27 28 29 Calculate the amount of goodwill or bargain purchase gain to be recorded on the acquisition. Assume now that MPL, Inc. offers to acquire Dark Horse at the purchase price identified in the data table. Determine the amount of goodwill or bargain purchase gain. a. Use a minus sign or parentheses for bargain purchase gain, if any. b. Use cell references from prior calculations, if applicable. 30 31 32 Saving & Submitting Solution 33 1 Save file to desktop. 34 Create folder on desktop, and label COMPLETED EXCEL PROJECTS 35 36 B. 37 b. 38 C. a. 2 Upload and submit your file to be graded. Navigate back to the activity window-screen where you downloaded the initial spreadsheet Click Choose button under step 3; locate the file you just saved and click Open Click Upload button under step 3. 39 d. Click Submit button under step 4 40 41 42 Viewing Results 43 1 Click on Recite tah in MuArrnuntinel ah, INSTRUCTIONS ENTERANSWERS 11. Calculate the amount of goodwill or bargain purchase gain to be recorded on the acquisition. (Always use cell references and formulas where appropriate to receive full credit. If you copy/paste from the 2 Instructions tab you will be marked wrong.) 3 4 Fair value of net assets 5 Goodwill (bargain purchase gain) 6 2. Assume now that MPL, Inc. offers to acquire Dark Horse at the purchase price identified in the data table. 7 Determine the amount of goodwill or bargain purchase gain. (Always use cell references and formulas where appropriate to receive full credit. If you copy/paste from the 8 Instructions tab you will be marked wrong. Use cell references from prior calculations, if applicable.) 9 10 Goodwill (bargain purchase gain) 11 12 13