1 answer

Plummet Corporation reported the book value of its net assets at $400,000 when Zenith Corporation acquired...

Question:

Plummet Corporation reported the book value of its net assets at $400,000 when Zenith Corporation acquired 100 percent ownership. The fair value of Plummet's net assets was determined to be $510,000 on that date.

9. Based on the preceding information, what amount of goodwill will be reported in consolidated financial statements presented immediately following the combination
if Zenith paid $550,000 for the acquisition?
A. $0
B. $50,000
C. $150,000
D. $40,000

*I know the answer is $40,000 but if you can please show computations for that answer.

10. Based on the preceding information, what amount will be recorded by Zenith as its investment in Plummet, if it paid $500,000 for the acquisition?
A. $610,000
B. $400,000
C. $500,000
D. $510,000

*I know the answer is $510,000 but if you can please show computations for that answer.

11. Based on the preceding information, what amount of goodwill will be reported in consolidated financial statements presented immediately following the combination
if Zenith paid $500,000 for the acquisition?
A. $0 B. $50,000
C. $150,000
D. $40,000

*I know the answer is $0 but if you can please show computations for that answer.


Answers

9. Computation of amount of broodwill Amount paid on aquisition : $ 550000 less! punchase price (fain value of Assets) 540,00

.

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