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Lesechka [4]
3 years ago
14

The Granny Smith Company agreed to purchase the Red Delicious Company for $800,000. At the date of purchase, Red Delicious had c

urrent assets with a fair market value of $450,000, noncurrent assets (including no marketable securities) with a fair market value of $750,000, and liabilities of $600,000. In accounting for this transaction, Granny Smith should ________.A. record noncurrent assets at $800,000B. record a debit of $200,000 as a loss on the purchaseC. record current assets at $800,000D. record goodwill of $200,000 to be reviewed annually for impairment
Business
1 answer:
BlackZzzverrR [31]3 years ago
3 0

Answer:

D. record goodwill of $200,000 to be reviewed annually for impairment

Explanation:

Given:

The Granny Smith Company agreed to purchase the Red Delicious Company for $800,000.

At the date of purchase, Red Delicious had :

Current assets with a fair market value = $450,000

Non current assets with a fair market value = $750,000

Total liabilities = $600,000

Question asked:

In accounting for this transaction, Granny Smith should...............

Solution:

Here he Granny Smith Company is purchasing another company Red  Delicious Company, we will have to determine the Goodwill owned by  Granny Smith Company by using this formula:

Goodwill =  ( C + NCI + FV ) − NA

C = Consideration transferred

NCI = Amount of non-controlling interest

FV =  Fair value of previous equity interests

NA = Net identifiable assets

Net identifiable assets  = Total assets - total liabilities

Total assets = current assets + non current assets

                     = $450,000 + $750,000 = $1200,000

​Net identifiable assets  = Total assets - total liabilities

                                     = $1200,000 -  $600,000 = $600,000

Goodwill =  ( C + NCI + FV ) − NA

               = ($800000 + 0 + 0) -  $600,000

               = $800000 - $600,000 =  $200,000

Hence, option D is correct, record goodwill of $200,000 to be reviewed annually for impairment.

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Which is an example of an economic factor that affects the business environment
lidiya [134]
Here are a couple of things hope they help

<span>1.)  Interest rates
</span><span>2.) Taxes Inflation
</span><span><span>3.) </span>Currency
</span><span>4.) exchange rates
</span><span>5.) Consumer discretionary income
</span><span>6.) Savings rates
</span><span>7.) Consumer confidence levels
</span><span>8.) Unemployment rate
</span><span>9.) Recession
</span><span><span>10.)</span> Depression </span>










5 0
3 years ago
Feline Watch Company makes wrist watches out of silver metal sheets. Five hours of labor are needed to make each watch. Factory
natima [27]

Answer:

Feline Watch Company should budget $15,000 overhead costs.

Explanation:

5 labor hours per unit of watch at $7 per labor hour

Variable Overheads $4 per labor hour

Total Variable overheads for 500 watches

$4 per labor hour * 5 labor hours per watch * 500 watches = $10,000

Fixed Overhead = $5,000

Total Overhead = $15,000

4 0
3 years ago
In 2020, Susan retired from her active participation in a 50% owned restaurant business, which she owned for 20 years. Susan is
icang [17]

Question Completion with Options:

a. Susan cannot deduct the $80,000 loss from the restaurant because she is not a material participant.

b. Susan can offset the $80,000 loss against the $150,000 of income from the retail store.

c. Susan will not be able to deduct any losses from the restaurant until she has been retired for at least three years.

d. Assuming Susan continues to hold the interest in the restaurant, she will always treat the losses as active.

Answer:

Susan

b. Susan can offset the $80,000 loss against the $150,000 of income from the retail store.

Explanation:

Susan can offset the $80,000 loss from the restaurant business against the income from the retail store because she has been an active and material participant in both businesses.  For the past 20 years, she had participated materially in the restaurant, only just retiring this year.   At least, she has passed the material participant test, number 5.

7 0
3 years ago
What economic concept is applied in this statement?
ycow [4]

By earning higher levels of education, students learn skills and are more likely to be employed. In their jobs, they use their skills to provide goods and services to others. The economic concept which is applied in this statement is a positive externality.

<h3>What are skills? </h3>

Skills refer a set of qualities or abilities an individual carries in order to complete the task. These skills represent the expertise of any individual in terms of knowledge and talents.

When these skills are learned along with the higher level of education it creates an add-on for the career. These skills include communication skills, problem-solving skills, critical thinking, leadership qualities, and so on.

Therefore, option E positive externality is the correct option for the given statement.

Learn more about education, here:

brainly.com/question/27478017

#SPJ1

8 0
2 years ago
LMN Insurance Company is concerned about its exposure to hurricane losses for property risks it insured on the Gulf Coast. LMN b
ELEN [110]

Answer:

c) Catastrophe Bonds

Explanation:

These type of bonds are also known as the CAT bonds, and they are issued  at any catastrophic event which is foreseen in the future. Basically these are insured linked securities that are used in the process of managing risks that are associated with the catastrophic events such as mentioned in the question i.e hurricane.

Any investor before investing in these bonds should fully understand what type of bonds are these because they posses a greater risk of low return and are very different from conventional bonds.

Hope this helps.

Thanks buddy.

3 0
3 years ago
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