Exercise 2-9

Company S has no long-term marketable securities. Assume the following scenarios: Case A Assume that P Company paid $132,200 cash for 100% of the net assets of S Company.

S COMPANY
Assets
		Current Assets		Long-lived Assets		Liabilities		Net Assets
Book Value		$15,440		$80,850		$19,720		$76,570
Fair Value		21,890		122,330		28,810		115,410

Case B Assume that P Company paid $110,970 cash for 100% of the net assets of S Company.

S COMPANY
Assets
		Current Assets		Long-lived Assets		Liabilities		Net Assets
Book Value		$15,440		$80,850		$19,720		$76,570
Fair Value		29,450		85,020		19,590		94,880

Case C Assume that P Company paid $14,930 cash for 100% of the net assets of S Company.

S COMPANY
Assets
		Current Assets		Long-lived Assets		Liabilities		Net Assets
Book Value		$15,440		$80,850		$19,720		$76,570
Fair Value		20,910		36,290		38,980		18,220

Complete the following schedule by listing the amount that would be recorded on Ps books.

				Assets						Retained Earnings
		Goodwill		Current Assets		Long-lived Assets		Liabilities		(Gain)
Case A		$		$		$		$		$
Case B
Case C