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Scilla [17]
3 years ago
14

Patton has acquired several other companies. Assume that Patton purchased Kate for $ 9 comma 000 comma 000 cash. The book value

of Kate's assets is $ 18 comma 000 comma 000 ​(market value, $ 20 comma 000 comma 000​), and it has liabilities of $ 14 comma 000 comma 000 ​(market value, $ 14 comma 000 comma 000​). Requirements 1. Compute the cost of goodwill purchased by Patton. 2. Record the purchase of Kate by Patton. Requirement 1. Compute the cost of goodwill purchased by Patton. Purchase price to acquire Kate Market value of Kate's assets Less: Market value of Kate's liabilities Less: Market value of Kate's net assets Goodwill
Business
1 answer:
mel-nik [20]3 years ago
6 0

Answer:

1. Compute the cost of goodwill purchased by Patton.

goodwill = acquisition price - FMV (assets - liabilities)

acquisition price = $9,000,000

FMV assets = $20,000,000

FMV liabilities = $14,000,000

Goodwill = $9,000,000 - ($20,000,000 - $14,000,000) = $9,000,000 - $6,000,000 = $3,000,000

2. Record the purchase of Kate by Patton.

Dr Kate Co. 6,000,000

Dr Goodwill 3,000,000

    Cr Cash 9,000,000

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3 years ago
Net working capital increases when: Multiple Choice inventory is sold at cost. fixed assets are purchased for cash. inventory is
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d. inventory is sold at a profit

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6 0
2 years ago
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Answer:

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6 0
2 years ago
A clothing store has ordered 100,000 swimsuits. It costs $22 to produce a swimsuit. They plan to sell them until August 31 at a
fomenos

Answer:

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<em />

<em>(NOTE: The formula mentioned above can be used to compute the correct profit for any demand level, even though if there is a change in sp and/or cp, the formula can also be useful.)</em>

8 0
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