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Yajie Zou

Assignement 1
Chapter 1
E2, E10, E12, E19, P33, P34
E2
1. a
2. c
3. d
4. d
5. c
E10
a.
b.
c.

Goodwill = $310,000 - $190,000 = $120,000


Investment = $310,000
Goodwill = $196,000 - $190,000 = $120,000
Investment = $196,000
Goodwill: $0
Investment: $190,000
(Purchase price < Fair value) Negative goodwill, Bargain purchase element

E12
a. Common Stock
$200,000 + $10 x 8000 = $280,000
b. Cash and Receivables
$150,000 + $40,000 = $190,000
c. Land
Elm Book + Maple Fair = $100,000 + $85,000 = $185,000
d. Buildings and Equipment (net)
Elm Book + Maple Fair = $300,000 + $230,000 = $530,000
e. Goodwill
$50 x 8,000 - $355,000 = $45,000
f. Additional paid-In Capital
$20,000 + ($50 - $10) x 8,000 = $340,000
g. Retained Earnings
$330,000
E19
Carrying Value of Investment = $30,000 + $70,000 + $30,000 + $210,000 + $160,000 + $150,000 $100,000 =$550,000
Total Fair value = $30,000 + $100,000 + $60,000 + $230,000 + $170,000 - $100,000 = $490,000
a. Report goodwill of $150,000 ($580,000 > $550,000)
b. Report goodwill of $50,000 + impairment of goodwill of $100,000 (540,000-490,000)
c. Report goodwill of $10,000 + impairment of goodwill of $140,000 (500,000-490,000)

d. No goodwill reported + impairment of goodwill of $150,000 (490,000 > $460,000)


P33
a. Journal Entry
Cash
Cash
Account Receivable
Inventory
Patents
Buildings and Equipment
Goodwill
Account Payable
Note Payable
b. Balance Sheet
Asset
Cash
Accounts Receivable
Inventory
Patents
Buildings and Equipment
Less: Accumulated Depreciation
Goodwill
Total Asset
Liabilities and Equities
Accounts Payable
Note Payable
Common Stock
Additional Paid-In Capital
Retained Earnings
Total Liabilities and Equities
c. Journal Entry
Cash
Investment in Zink
P34
Fair value of asset acquired = $700,000 - $30,000 = $670,000
$670,000 > $625,000
Bargain Purchase => Gain $45,000
Journal Entry
Expense associated with Merger
Cash
Cash
Gain on Bargain Purchase

$178,000
$20,000
$35,000
$50,000
$60,000
$150,000
$38,000
$55,000
$120,000
$82,000
$175,000
$220,000
$140,000
$530,000al
$(190,000)
$38,000
$995,000
$140,000
$270,000
$200,000
$160,000
$225,000
$995,000
$178,000
$178,000

$5,000
$5,000
$625,000
$45,000

Cash and Receivables


Inventory
Buildings and Equipment (net)
Patent
Account Payable

$50,000
$150,000
$300,000
$200,000
$30,000