Question
On January 1, the balance sheet of Naperville Company was as follows. Assets Accounts receivable (net of allowance) $156,000 Inventory 234,000 Plant and equipment (net
On January 1, the balance sheet of Naperville Company was as follows.
Assets | ||
Accounts receivable (net of allowance) | $156,000 | |
Inventory | 234,000 | |
Plant and equipment (net of depreciation) | 520,000 | |
Land | 78,000 | |
Total assets | $988,000 | |
Liabilities | ||
Current | $98,800 | |
Noncurrent | 208,000 | $306,800 |
Equity | ||
Equity | 681,200 | |
Total liabilities and equity | $988,000 |
On January 1, Chicago Corporation purchased all of the assets and assumed all of the liabilities listed on the above balance sheet for $754,000 cash. The assets, on date of purchase, were valued by Chicago Corporation as follows: Accounts receivable (net), $130,000; Inventory, $221,000; Plant and equipment (net), $520,000; and Land, $117,000. In addition, Chicago Corporation estimated purchased intangible assets of $5,200 for customer list, and $20,800 for trade names (both previously unrecorded). The liabilities were valued at their carrying amounts.
Required a. Compute the amount of goodwill included in the purchase price paid by Chicago Corporation. b. Provide the entry that Chicago Corporation should make to record the purchase of Naperville Company. c. What is the minimum amount of goodwill that Chicago Corporation can amortize at the end of the year? Chicago Corp. is not a private company.
a. Amount of goodwill in purchase price $Answer
Date | Account Name | Dr. | Cr. |
---|---|---|---|
b. January 1 | Accounts Receivable (net)InventoryPlant and Equipment (net)LandIntangible AssetCustomer ListIntangible AssetTradenamesGoodwillCurrent LiabilitiesNoncurrent LiabilitiesCash | Answer
| |
Accounts Receivable (net)InventoryPlant and Equipment (net)LandIntangible AssetCustomer ListIntangible AssetTradenamesGoodwillCurrent LiabilitiesNoncurrent LiabilitiesCash | Answer
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Accounts Receivable (net)InventoryPlant and Equipment (net)LandIntangible AssetCustomer ListIntangible AssetTradenamesGoodwillCurrent LiabilitiesNoncurrent LiabilitiesCash | Answer
| ||
Accounts Receivable (net)InventoryPlant and Equipment (net)LandIntangible AssetCustomer ListIntangible AssetTradenamesGoodwillCurrent LiabilitiesNoncurrent LiabilitiesCash | Answer
| ||
Accounts Receivable (net)InventoryPlant and Equipment (net)LandIntangible AssetCustomer ListIntangible AssetTradenamesGoodwillCurrent LiabilitiesNoncurrent LiabilitiesCash | Answer
| ||
Accounts Receivable (net)InventoryPlant and Equipment (net)LandIntangible AssetCustomer ListIntangible AssetTradenamesGoodwillCurrent LiabilitiesNoncurrent LiabilitiesCash | Answer
| ||
Accounts Receivable (net)InventoryPlant and Equipment (net)LandIntangible AssetCustomer ListIntangible AssetTradenamesGoodwillCurrent LiabilitiesNoncurrent LiabilitiesCash | Answer
| ||
Accounts Receivable (net)InventoryPlant and Equipment (net)LandIntangible AssetCustomer ListIntangible AssetTradenamesGoodwillCurrent LiabilitiesNoncurrent LiabilitiesCash | Answer
| ||
Accounts Receivable (net)InventoryPlant and Equipment (net)LandIntangible AssetCustomer ListIntangible AssetTradenamesGoodwillCurrent LiabilitiesNoncurrent LiabilitiesCash | Answer
| ||
Accounts Receivable (net)InventoryPlant and Equipment (net)LandIntangible AssetCustomer ListIntangible AssetTradenamesGoodwillCurrent LiabilitiesNoncurrent LiabilitiesCash | Answer
| ||
To record the purchase. |
c. What is the minimum amount of goodwill that Chicago Corporation can amortize at the end of the year? $Answer
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