Maxwell paid cash of $2,700,000 for this investment which gave them significant influence over Magic. The following book values and fair values for Magic on that date are available: Book Value Fair Value Cash and Receivables $ 110,000 $ 110,000 Equipment 5,000,000 5,700,000 Patents 100,000 4,000,000 Trademark 150,000 2,000,000 Liabilities (185,000) (185,000) The remaining useful life for these assets are: Equipment 7 years Patents 3 years Trademark indefinite Any unidentified excess cost is attributed to Goodwill. During the next two years Magic reported income of $1,800,000 for 2020 and $1,985,000 for 2021 and paid dividends of $150,000 for 2020 and $160,000 for 2021. What amount of goodwill is attributable to this purchase? What amount should Maxwell report for its equity in Magic’s earnings on its income statement for 2020? What amount should Maxwell report for its investment in Magic on its balance sheet at December 31, 2021?
Maxwell paid cash of $2,700,000 for this investment which gave them significant influence over Magic. The following book values and fair values for Magic on that date are available:
Book Value Fair Value
Cash and Receivables $ 110,000 $ 110,000
Equipment 5,000,000 5,700,000
Patents 100,000 4,000,000
Trademark 150,000 2,000,000
Liabilities (185,000) (185,000)
The remaining useful life for these assets are:
Equipment 7 years Patents 3 years Trademark indefinite
Any unidentified excess cost is attributed to
What amount of goodwill is attributable to this purchase? What amount should Maxwell report for its equity in Magic’s earnings on its income statement for 2020?
What amount should Maxwell report for its investment in Magic on its balance sheet at December 31, 2021?
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