Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

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

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Management Accounting

Authors: Pauline Weetman

2nd Edition

0273718452, 978-0273718451

More Books

Students also viewed these Accounting questions

Question

Give three examples of social engineering not listed in the text.

Answered: 1 week ago