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2 years ago

On January 1, 2020, the balance sheet of Naperville Company (a sole proprietorship) was as follows.

Business

1 answer:

guapka [62]2 years ago

8 0

Answer:

Explanation:

From the information povided:

(a) To compute the amount of goodwill paid by Chicago Corporation

Particulars Amount ($)

Accounts Receivable 100000

Inventory 170000

Plant & Equipment 400000

Land 90000

Customer List 4000

Trade Names 16000

NET ASSETS (A) 780000

Current liabilities 76000

Non-current liabilities 160000

NET LIABILITIES (B) 236000

∴

PURCHASE CONSIDERATION (A -B) 544000

Less: Cash Paid 580000

GODWILL 36000

In the books of Chicago Corporation, the Journal Entry to record the purchase of Naperville Company.

Account Name Dr. Cr.

Accounts Receivable A/C 100000

Inventory A/C 170000

Plant Equipment A/C 400000

Land A/C 90000

Customer List A/C 4000

Trade Names A/C 16000

Goodwill A/C 36000

Current liabilities A/C 76000

Non-Current Liabilities A/C 160000

Cash A/C 580000

The minimum required amount of goodwill that Chicago can amortize by the end of 2020 is $3600.This is because the amortization can take place for a period of 10 years.

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