Exercise 2.9 Allocation of Purchase Price to Various Assets and Liabilities LO6 Company S has no long-term marketable securities. Assume the following scenarios: Case A Assume that P Company paid $130,000 cash for 100% of the net assets of S Company. S COMPANY Assets Current Assets Long-lived Assets Liabilities Net Assets Case B Book Value Fair Value $15,000 20,000 $85,000 $20,000 $80,000 130,000 30,000 120,000 Assume that P Company paid $110,000 cash for 100% of the net assets of S Company. Case C S COMPANY Assets Current Assets Long-lived Assets Liabilities Net Assets $85,000 $20,000 $80,000 Book Value $15,000 Fair Value 30,000 80,000 20,000 90,000 Assume that P Company paid $15,000 cash for 100% of the net assets of S Company. 8 9 0 1 Required: S COMPANY Assets Current Assets Long-lived Assets Liabilities Net Assets Book Value Fair Value $15,000 20,000 $85,000 40,000 $20,000 $80,000 40,000 20,000 Complete the following schedule by listing the amount that would be recorded on P's books. 3 4 5 16 Case A 37 Case B Assets Goodwill Current Assets Long-lived Assets Liabilities Retained Earnings (Gain in Income Statement) Exercise 2.9 Allocation of Purchase Price to Various Assets and Liabilities LO6 Company S has no long-term marketable securities. Assume the following scenarios: Case A Assume that P Company paid $130,000 cash for 100% of the net assets of S Company. S COMPANY Assets Current Assets Long-lived Assets Liabilities Net Assets Case B Book Value Fair Value $15,000 20,000 $85,000 $20,000 $80,000 130,000 30,000 120,000 Assume that P Company paid $110,000 cash for 100% of the net assets of S Company. Case C S COMPANY Assets Current Assets Long-lived Assets Liabilities Net Assets $85,000 $20,000 $80,000 Book Value $15,000 Fair Value 30,000 80,000 20,000 90,000 Assume that P Company paid $15,000 cash for 100% of the net assets of S Company. 8 9 0 1 Required: S COMPANY Assets Current Assets Long-lived Assets Liabilities Net Assets Book Value Fair Value $15,000 20,000 $85,000 40,000 $20,000 $80,000 40,000 20,000 Complete the following schedule by listing the amount that would be recorded on P's books. 3 4 5 16 Case A 37 Case B Assets Goodwill Current Assets Long-lived Assets Liabilities Retained Earnings (Gain in Income Statement)