Question
Trying this again: Please only show me how to calculate Goodwill for a total of $875,000 SUN acquired 100% of the voting shares of MOON.
Trying this again: Please only show me how to calculate Goodwill for a total of $875,000
SUN acquired 100% of the voting shares of MOON. In exchange, SUN issued 60,000 common shares, with a market value of $22 per share, to the common shareholders of MOON. Both companies have a June 30 year-end, and this transaction occurred on June 30, 2020.
The following are the statements of financial position of the two companies at June 30, 2020 before the transaction took place.
Statements of Financial Position June 30, 2020
SUN | Moon | |||
Carrying Value | Fair Values | Carrying Value | Fair Values | |
Current assets | $ 450,000 | $ 400,000 | $ 200,000 | $ 225,000 |
Capital assets (net) | 14,000,000 | 12,000,000 | 1,000,000 | 950,000 |
Goodwill | 200,000 | - | ||
Total | 14,650,000 | 1,200,000 | ||
Current liabilities | $ 200,000 | $ 100,000 | $ 145,000 | $ 150,000 |
Long-term liabilities | 600,000 | 625,000 | 200,000 | 180,000 |
Preferred shares | - | 200,000 | 200,000 | |
Common shares | 250,000 | 250,000 | ||
Retained earnings | 13,600,000 | 405,000 | ||
14,650,000 | 1,200,000 |
Instructions: Enter all numbers without dollar signs. Round numbers to the nearest whole dollar do not enter any decimals in your number. Use commas properly. If the amount is zero, enter 0, do not leave any answers blank. For example, a properly formatted number is 125,250. Numbers incorrectly formatted with not result in any marks.
Solution: Below are the correct answers except goodwill. Can someone show me to how to calculate it? I had gotten $675,000 but It is supposed to be $875,000
Please only show me how to calculate Goodwill for a total of $875,000
Carrying Value (SUN) | Fair Value (Moon) | Total | ||
Current Assets | 450,000 | 225,000 | 675,000 | |
Capital Assets | 14,000,000 | 950,000 | 14,950,000 | |
Goodwill | 200,000 | 0 | 475,000 | 675,000 |
Total | 14,650,000 | 1,175,000 | 16,300,000 | |
Current Liabilities | 200,000 | 150,000 | 350,000 | |
Long-term Liabilities | 600,000 | 180,000 | 780,000 | |
Preferred Shares | 0 | 200,000 | 200,000 | |
Common Shares | 250,000 | 1,320,000 | 1,570,000 | |
Retained Earnings | 13,600,000 | 13,600,000 | ||
14,650,000 | 16,500,000 |
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