Reebok International is a leading worldwide designer, marketer, and distributor of sport, fitness, and lifestyle products, including

Question:

Reebok International is a leading worldwide designer, marketer, and distributor of sport, fitness, and lifestyle products, including footwear and apparel. The notes to a recent annual report from Reebok included the following:image text in transcribed

Assume that Reebok acquired Perfection Sport Fashions on January 5. 2003. Reebok acquired the name of the company and all of its assets, except cash, for $400,000 cash. Reebok did not assume the liabilities. The transaction was closed on January 5, 2003. at which time the balance sheet of Perfection Sport Fashions reflected the following book values and an independent appraiser estimated the following market values for the assets:image text in transcribed

Required: 1. Compute the amount of goodwill resulting from the purchase. (Hint: Assets are purchased at market value in conformity with the cost principle.) 2. Compute the adjustments that Reebok would make at the end of the annual accounting period.

December 31, 2003, for the following:

a. Depreciation of the fixed assets (straight line), assuming an estimated remaining useful life of 15 years and no residual value.

b. Goodwill (an intangible asset with an indefinite life).

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Financial Accounting

ISBN: 9780070891739

1st Canadian Edition

Authors: Robert Libby

Question Posted: