P Company wishes to acquire S Co. for cash in an asset acquisition, and appraisals reveal that the inventory has a fair value $195,000, and the equipment has a current value of $625,000. The book value and fair value of liabilities are the same. The following balance sheets were reported on January 1, 2011, for P Company and S Company: S Co. $ 30,000 P Co. Cash $ 150,000 Inventory 450,000 150,000 Equipment (net) Total 1,320,000 $1.920,000 570,000 $750,000 Total liabilities $ 450,000 $150,000 Common stock, $20 par value Other contributed capital Retained earnings 600,000 375,000 300,000 105,000 195,000 $750,000 495,000 Total $1,920,000 Determine the purchase price above which P Co. would record goodwill. O $705,000 $710,000 O $700,000 O $695,000 O None of the options is correct Determine the purchase price at which P Co. would record a $30.000 gain." O $685,000 O $670,000 O $690,000 O s665.000 O None of the options is correct O O O OO O O O OC
P Company wishes to acquire S Co. for cash in an asset acquisition, and appraisals reveal that the inventory has a fair value $195,000, and the equipment has a current value of $625,000. The book value and fair value of liabilities are the same. The following balance sheets were reported on January 1, 2011, for P Company and S Company: S Co. $ 30,000 P Co. Cash $ 150,000 Inventory 450,000 150,000 Equipment (net) Total 1,320,000 $1.920,000 570,000 $750,000 Total liabilities $ 450,000 $150,000 Common stock, $20 par value Other contributed capital Retained earnings 600,000 375,000 300,000 105,000 195,000 $750,000 495,000 Total $1,920,000 Determine the purchase price above which P Co. would record goodwill. O $705,000 $710,000 O $700,000 O $695,000 O None of the options is correct Determine the purchase price at which P Co. would record a $30.000 gain." O $685,000 O $670,000 O $690,000 O s665.000 O None of the options is correct O O O OO O O O OC
Auditing: A Risk Based-Approach to Conducting a Quality Audit
10th Edition
ISBN:9781305080577
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Chapter16: Advanced Topics Concerning Complex Auditing Judgments
Section: Chapter Questions
Problem 55RSCQ
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