Goodwill Instructions Chart of Accounts Goodwill Next Level General Journal Instructions 1 Cash Hamilton Company Balance Sheet January 1, 2019 $30,000.00 Accounts payable 80,000.00 Bonds payable 40,000.00 Pension liability 100,000.00 Common stock 200,000.00 Retained earnings 2 Accounts receivable Marketable securities (short-term) Inventory 5 Property, plant, and equipment (net) $450,000.00 Instructions Chart of Accounts Goodwill Next Level General Journal Instructions s receivable ble securities (short-term) Hamilton Company Balance Sheet January 1, 2019 $30,000.00 Accounts payable 80,000.00 Bonds payable 40,000.00 Pension liability 100,000.00 Common stock 200.000,00 Retained earnings $450,000.00 $20,000.00 120,000.00 50,000.00 200,000.00 plant, and equipment (net) 60,000.00 $450,000.00 bel Company is considering purchasing Hamilton (a privately held company) and discovers the following about Hamilton: a. No allowance for doubtful accounts has been established. A $10,000 allowance is considered appropriate. b. Marketable securities are valued at cost. The current market value is $60,000. C. The LIFO inventory method is used. The FIFO inventory of $140,000 would be used if the company is acquired. d. Land, included in property, plant, and equipment, which is recorded at its cost of $50,000, is worth $120,000. The remaining property, plant, and equipment is worth 10% more than its depreciated cost. e. The company has an unrecorded trademark that is worth $70,000. 1. The company's bonds are currently trading for $130,000. 9. The pension liability is understated by $40,000. Required: 1. Compute the amount of goodwill in Korbel agrees to pay $500,000 cash for Hamilton 2. Next Level What are the reasons that the book value of Hamilton's net identifiable assets differ from their market value? 3. Prepare the journal entry to record the acquisition on the books of Korbel assuming Hamilton is liquidated. 4. I Korbel agrees to pay only $400,000 cash, how much goodwill oxists? 5. Korbel pays only $400,000 cash, prepare the journal entry to record the acquisition on its books, assuming Hamilton is liquidated. Goodwill 1. Compute the amount of goodwill if Korbel agrees to pay $500,000 cash for Hamilton. $240,000.00 4. If Korbel agrees to pay only $400,000 cash, how much goodwill exists? none $15,000 $85,000 $100,000 Next Level 2. Which of the following are reasons that the book value of Hamilton's net identifiable assets differ from their market value? I. An unidentifiable intangible asset (goodwill) exists and is not reported on Hamilton's books. II. Hamilton's inventory is valued using LIFO, which is different from its value under FIFO. III. Hamilton has a valuable internally developed trademark that is not recorded. I, II and II. 3. Prepare the journal entry to record the acquisition of Hamilton by Korbel Company on January 1, 2019. Assume Korbel pays $500,000 cash and Hamilton is liquidated GOERA JOUR 1 1 at a Account Revale Marketable Securities 50.000.00 7.000.00 000000 1000000 12.000.00 4 1 . 1 Property Partner ade Patie Bonsable Pension 165.000.00 70.000 2000000 190.00000 . 5. Prepare the journal entry to record the acquisition of Hamilton by Korbel Company on January 1, 2019. Assume Korbel pays $400,000 cash and Hamilton is liquidated. GENERAL JOUR CREST 1 1.000.00 2 1 ACCU 1 C Accounts Investor Land Property Plan and Equipment Tada 700000 10.000.00 130.000.00 1 . 5.000.00 70.000.00 35.000.00 20.000.00 Poate Bonds Payable Pension Cash 30 150.000.00 90.000.00 500.000.00
