Question
Problem 7-3A Calculate and record goodwill (LO7-2) Fresh Cut Corporation purchased all the outstanding common stock of Premium Meats for $12,000,000 in cash. The book
Problem 7-3A Calculate and record goodwill (LO7-2)
Fresh Cut Corporation purchased all the outstanding common stock of Premium Meats for $12,000,000 in cash. The book values and fair values of Premium Meats' assets and liabilities were:
Book Value | Fair Value | |||||||
Accounts Receivable | $ | 1,800,000 | $ | 1,600,000 | ||||
Equipment | 8,500,000 | 9,900,000 | ||||||
Patents | 300,000 | 1,700,000 | ||||||
Notes Payable | (2,700,000 | ) | (2,700,000 | ) | ||||
Net assets | $ | 7,900,000 | $ | 10,500,000 | ||||
Required:
1. Calculate the amount Fresh Cut should report for goodwill. (Enter your answer in millions rounded to 1 decimal place. (i.e., $5,500,000 should be entered as 5.5).)
2. Record Fresh Cut's acquisition of Premium Meats. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).)
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