8/9/2019 Chapter 1 Problems--Template Solutions http://slidepdf.com/reader/full/chapter-1-problems-template-solutions 1/108 Name of Company Being Acquired Cardinal Company Date of Acquisition December 31, 20X1 Book Priority Market Current Assets Current Assets 0,000 1 100,000 1 1 1 Total Current Assets 80,000 100,000 Investments ! 1 ! Fixed Assets "and #0,000 2 $#,000 Building %net& 2#0,000 2 300,000 'quipment %net& 200,000 2 2$#,000 2 Total Fixed Assets 500,000 650,000 Intani!les (atents 2 Brand Name Copyrig)t 2 2 2 2 *ood+ill N Total Intani!les " " Total Assets 580,000 #50,000 Pur$%ase Pri$e Cas) 00,000 Number of )ares e-c)anged (ar .alue of a s)are of stoc/ ar/et .alue of a s)are of stoc/ ar/et .alue of stoc/ e-c)anged ! Direct acquisition costs ncurred 1#,000 Total &ur$%ase Pri$e 815,000 'one Analysis *roup otal (riority %2,000& %2,000& Nonpriority %2& #0,000 4,000 Cumulati5e *roup otal
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8/9/2019 Chapter 1 Problems--Template Solutions
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Name of Company Being Acquired Cardinal Company
Date of Acquisition December 31, 20X1
Book Priority Market
Current Assets
Current Assets 0,000 1 100,000
11
1
Total Current Assets 80,000 100,000
Investments ! 1 !
Fixed Assets
"and #0,000 2 $#,000
Building %net& 2#0,000 2 300,000
'quipment %net& 200,000 2 2$#,000
2
Total Fixed Assets 500,000 650,000
Intani!les
(atents 2Brand Name Copyrig)t 2
2
2
2
*ood+ill N
Total Intani!les " "
Total Assets 580,000 #50,000
Pur$%ase Pri$e
Cas) 00,000
Number of )ares e-c)anged
(ar .alue of a s)are of stoc/
ar/et .alue of a s)are of stoc/
ar/et .alue of stoc/ e-c)anged !
Direct acquisition costs ncurred 1#,000
Total &ur$%ase Pri$e 815,000
'one Analysis
*roup otal
(riority %2,000& %2,000&
Nonpriority %2& #0,000 4,000
Cumulati5e*roup otal
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(rice (aid 1#,000
Assign to (riority %2,000&
Assign to Nonpriority #0,000
*ood+ill 1$,000
'-traordinary *ain !
Assinment and Allo$ation ($%edule Market )Fair* +alue (ercentage
Priority A$$ounts
Current Assets 100,000
! !
! !
! !
n5estments !"iabilities %102,000&
! !
! !
! !
! !
! !
! !
! !
otal (riority %2,000&
on&riority A$$ounts
"and $#,000 126 #0,000Building %net& 300,000 46 #0,000
'quipment %net& 2$#,000 426 #0,000
! ! 06 #0,000
(atents ! 06 #0,000
Brand Name Copyrig)t ! 06 #0,000
! ! 06 #0,000
! ! 06 #0,000
! ! 06 #0,000
otal Nonpriority #0,000
*ood+ill 1$,000
'-traordinary *ain !
otal %s)ould equal purc)ase price&
Amountto
Allocate
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-ntry
A$$ount ame .e!it )Credit*
Current Assets 100,000
! !
! !! !
n5estments !
"iabilities %102,000&
! !
! !
! !
! !
! !
! !
! !
"and $#,000
Building %net& 300,000'quipment %net& 2$#,000
! !
(atents !
Brand Name Copyrig)t !
! !
! !
! !
*ood+ill 1$,000
'-traordinary *ain !
Cas) %1#,000&
Common toc/ !
(aid in Capital in '-cess of (ar !
C)ec/ !
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Book Priority Market
Current /ia!ilities
"iabilities 100,000 1 102,000
777777
777
Total Current /ia!ilities 100,000 10,000
t%er /ia!ilities
1
1
1
1
Total t%er /ia!ilities " "
Total /ia!ilities 100,000 10,000
(to$k%olders2 -3uity
Common toc/ 100,000(aid in Capital in '-cess of (ar 1#0,000
8etained 'arnings 230,000
Total -3uity 480,000
Total /ia!ilities and -3uity 580,000
et Assets 648,000
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Assined or Allo$ated Amount
100,000
!
!
!
!%102,000&
!
!
!
!
!
!
!
%2,000&
$#,000300,000
2$#,000
!
!
!
!
!
!
#0,000
1$,000
!
1#,000
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Name of Company Being Acquired mit)
Date of Acquisition 9uly 31, 20-1
Book Priority Market
Current Assets
Cas) 100,000 1 100,000
n5entory 300,000 1 2#0,0001
1
Total Current Assets 400,000 50,000
Investments ! 1 !
Fixed Assets
"and 200,000 2 10,000
Building %net& 2#0,000 2 300,000
'quipment %net& 200,000 2 220,000
2
Total Fixed Assets 650,000 #00,000
Intani!les
22
2
2
2
*ood+ill N
Total Intani!les " "
Total Assets 1,050,000 1,050,000
Pur$%ase Pri$e
Cas)
Number of )ares e-c)anged 0,000
(ar .alue of a s)are of stoc/ #
ar/et .alue of a s)are of stoc/ 20
ar/et .alue of stoc/ e-c)anged 1,200,000
Direct acquisition costs ncurred 2#,000
Total &ur$%ase Pri$e 1,5,000
'one Analysis
*roup otal
(riority %140,000& %140,000&
Nonpriority %2& $00,000 #0,000
Cumulati5e*roup otal
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(rice (aid 1,22#,000
Assign to (riority %140,000&
Assign to Nonpriority $00,000
*ood+ill #,000
'-traordinary *ain !
Assinment and Allo$ation ($%edule Market )Fair* +alue (ercentage
Priority A$$ounts
Cas) 100,000
n5entory 2#0,000
! !
! !
n5estments !
"iabilities %0,000& ! !
! !
! !
Bonds (ayable %##0,000&
Discount on Bonds (ayable 140,000
! !
! !
otal (riority %140,000&
on&riority A$$ounts
"and 10,000 26 $00,000
Building %net& 300,000 436 $00,000'quipment %net& 220,000 316 $00,000
! ! 06 $00,000
! ! 06 $00,000
! ! 06 $00,000
! ! 06 $00,000
! ! 06 $00,000
! ! 06 $00,000
otal Nonpriority $00,000
*ood+ill #,000
'-traordinary *ain !
otal %s)ould equal purc)ase price&
Amount to Allocate
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-ntry
A$$ount ame .e!it )Credit*
Cas) 100,000
n5entory 2#0,000
! !
! !n5estments !
"iabilities %0,000&
! !
! !
! !
Bonds (ayable %##0,000&
Discount on Bonds (ayable 140,000
! !
! !
"and 10,000
Building %net& 300,000
'quipment %net& 220,000! !
! !
! !
! !
! !
! !
*ood+ill #,000
'-traordinary *ain !
Cas) %2#,000&
Common toc/ %300,000&
(aid in Capital in '-cess of (ar %:00,000&
C)ec/ !
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Book Priority Market
Current /ia!ilities
"iabilities 0,000 1 0,000
1777
777
Total Current /ia!ilities 80,000 80,000
t%er /ia!ilities
Bonds (ayable ##0,000 1 ##0,000
Discount on Bonds (ayable 1 %140,000&
1
1
Total t%er /ia!ilities 550,000 410,000
Total /ia!ilities 60,000 40,000
(to$k%olders2 -3uity
Common toc/ 200,000(aid in Capital in '-cess of (ar 100,000
8etained 'arnings 120,000
Total -3uity 40,000
Total /ia!ilities and -3uity 1,050,000
et Assets 560,000
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Assined or Allo$ated Amount
100,000
2#0,000
!
!
!
%0,000& !
!
!
%##0,000&
140,000
!
!
%140,000&
10,000
300,000220,000
!
!
!
!
!
!
$00,000
#,000
!
1,22#,000
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Name of Company Being Acquired (yrimid Corporations
Date of Acquisition 9anuary 1, 20X1
Book Priority Market
Current Assets
Accounts 8ecei5able 200,000 1 200,000
n5entory 2$0,000 1 2$0,0001
1
Total Current Assets 4#0,000 4#0,000
Investments ! 1 !
Fixed Assets
'quipment %net& 100,000 2 40,000
2
2
2
Total Fixed Assets 100,000 40,000
Intani!les
Brand Name Copyrig)ts 2 1#,0002
2
2
2
*ood+ill N
Total Intani!les " 15,000
Total Assets 5#0,000 55,000
Pur$%ase Pri$e
Cas) 10,000
Number of )ares e-c)anged
(ar .alue of a s)are of stoc/
ar/et .alue of a s)are of stoc/
ar/et .alue of stoc/ e-c)anged !
Direct acquisition costs ncurred 10,000
Total &ur$%ase Pri$e 10,000
'one Analysis
*roup otal
(riority 140,000 140,000
Nonpriority %2& ##,000 1:#,000
Cumulati5e*roup otal
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(rice (aid 1:0,000
Assign to (riority 140,000
Assign to Nonpriority #0,000
*ood+ill !
'-traordinary *ain !
Assinment and Allo$ation ($%edule Market )Fair* +alue (ercentage
Priority A$$ounts
Accounts 8ecei5able 200,000
n5entory 2$0,000
! !
! !
n5estments !Current "iabilities %0,000&
! !
! !
! !
ortgage (ayable %2#0,000&
! !
! !
! !
otal (riority 140,000
on&riority A$$ounts
'quipment %net& 40,000 $36 #0,000! ! 06 #0,000
! ! 06 #0,000
! ! 06 #0,000
Brand Name Copyrig)ts 1#,000 2$6 #0,000
! ! 06 #0,000
! ! 06 #0,000
! ! 06 #0,000
! ! 06 #0,000
otal Nonpriority ##,000
*ood+ill !
'-traordinary *ain !
otal %s)ould equal purc)ase price&
Amountto
Allocate
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-ntry
A$$ount ame .e!it )Credit*
Accounts 8ecei5able 200,000
n5entory 2$0,000
! !! !
n5estments !
Current "iabilities %0,000&
! !
! !
! !
ortgage (ayable %2#0,000&
! !
! !
! !
'quipment %net& 3,34
! !! !
! !
Brand Name Copyrig)ts 13,3
! !
! !
! !
! !
*ood+ill !
'-traordinary *ain !
Cas) %1:0,000&
Common toc/ !
(aid in Capital in '-cess of (ar !
C)ec/ !
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Book Priority Market
Current /ia!ilities
Current "iabilities 0,000 1 0,000
1777
777
Total Current /ia!ilities 80,000 80,000
t%er /ia!ilities
ortgage (ayable 2#0,000 1 2#0,000
1
1
1
Total t%er /ia!ilities 50,000 50,000
Total /ia!ilities 0,000 0,000
(to$k%olders2 -3uity
Common toc/ 100,0008etained 'arnings 140,000
Total -3uity 40,000
Total /ia!ilities and -3uity 5#0,000
et Assets 15,000
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Assined or Allo$ated Amount
200,000
2$0,000
!
!
!%0,000&
!
!
!
%2#0,000&
!
!
!
140,000
3,34!
!
!
13,3
!
!
!
!
#0,000
!
!
1:0,000
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Name of Company Being Acquired (yrimid Corporations
Date of Acquisition 9anuary 1, 20X1
Book Priority Market
Current Assets
Accounts 8ecei5able 200,000 1 200,000
n5entory 2$0,000 1 2$0,0001
1
Total Current Assets 4#0,000 4#0,000
Investments ! 1 !
Fixed Assets
'quipment %net& 100,000 2 40,000
2
2
2
Total Fixed Assets 100,000 40,000
Intani!les
Brand Name Copyrig)ts 2 1#,0002
2
2
2
*ood+ill N
Total Intani!les " 15,000
Total Assets 5#0,000 55,000
Pur$%ase Pri$e
Cas) 12#,000
Number of )ares e-c)anged
(ar .alue of a s)are of stoc/
ar/et .alue of a s)are of stoc/
ar/et .alue of stoc/ e-c)anged !
Direct acquisition costs ncurred 10,000
Total &ur$%ase Pri$e 15,000
'one Analysis
*roup otal
(riority 140,000 140,000
Nonpriority %2& ##,000 1:#,000
Cumulati5e*roup otal
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(rice (aid 13#,000
Assign to (riority 140,000
Assign to Nonpriority !
*ood+ill !
'-traordinary *ain #,000
Assinment and Allo$ation ($%edule Market )Fair* +alue (ercentage
Priority A$$ounts
Accounts 8ecei5able 200,000
n5entory 2$0,000
! !
! !
n5estments !Current "iabilities %0,000&
! !
! !
! !
ortgage (ayable %2#0,000&
! !
! !
! !
otal (riority 140,000
on&riority A$$ounts
'quipment %net& 40,000 $36 !! ! 06 !
! ! 06 !
! ! 06 !
Brand Name Copyrig)ts 1#,000 2$6 !
! ! 06 !
! ! 06 !
! ! 06 !
! ! 06 !
otal Nonpriority ##,000
*ood+ill !
'-traordinary *ain #,000
otal %s)ould equal purc)ase price&
Amountto
Allocate
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Book Priority Market
Current /ia!ilities
Current "iabilities 0,000 1 0,000
1777
777
Total Current /ia!ilities 80,000 80,000
t%er /ia!ilities
ortgage (ayable 2#0,000 1 2#0,000
1
1
1
Total t%er /ia!ilities 50,000 50,000
Total /ia!ilities 0,000 0,000
(to$k%olders2 -3uity
Common toc/ 100,0008etained 'arnings 140,000
Total -3uity 40,000
Total /ia!ilities and -3uity 5#0,000
et Assets 15,000
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Assined or Allo$ated Amount
200,000
2$0,000
!
!
!%0,000&
!
!
!
%2#0,000&
!
!
!
140,000
!!
!
!
!
!
!
!
!
!
!
#,000
14#,000
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Name of Company Being Acquired Bass Company
Date of Acquisition December 31, 20X
Book Priority Market
Current Assets
Current Assets 100,000 1 120,000
11
1
Total Current Assets 100,000 10,000
Investments ! 1 !
Fixed Assets
"and #0,000 2 0,000
Buildings %net& 200,000 2 2#0,000
'quipment %net& 0,000 2 1#0,000
2
Total Fixed Assets 10,000 480,000
Intani!les
(atents 20,000 2 20,0002
2
2
2
*ood+ill N
Total Intani!les 0,000 0,000
Total Assets 40,000 60,000
Pur$%ase Pri$e
Cas) 400,000
Number of )ares e-c)anged
(ar .alue of a s)are of stoc/
ar/et .alue of a s)are of stoc/
ar/et .alue of stoc/ e-c)anged !
Direct acquisition costs ncurred 1,000
Total &ur$%ase Pri$e 418,000
'one Analysis
*roup otal
(riority 2,000 2,000
Nonpriority %2& #00,000 #2,000
Cumulati5e*roup otal
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(rice (aid 41,000
Assign to (riority 2,000
Assign to Nonpriority 3:0,000
*ood+ill !
'-traordinary *ain !
Assinment and Allo$ation ($%edule Market )Fair* +alue (ercentage
Priority A$$ounts
Current Assets 120,000
! !
! !
! !
n5estments !"iabilities %:2,000&
! !
! !
! !
! !
! !
! !
! !
otal (riority 2,000
on&riority A$$ounts
"and 0,000 16 3:0,000Buildings %net& 2#0,000 #06 3:0,000
'quipment %net& 1#0,000 306 3:0,000
! ! 06 3:0,000
(atents 20,000 46 3:0,000
! ! 06 3:0,000
! ! 06 3:0,000
! ! 06 3:0,000
! ! 06 3:0,000
otal Nonpriority #00,000
*ood+ill !
'-traordinary *ain !
otal %s)ould equal purc)ase price&
Amountto
Allocate
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-ntry
A$$ount ame .e!it )Credit*
Current Assets 120,000
! !
! !! !
n5estments !
"iabilities %:2,000&
! !
! !
! !
! !
! !
! !
! !
"and 2,400
Buildings %net& 1:#,000'quipment %net& 11$,000
! !
(atents 1#,00
! !
! !
! !
! !
*ood+ill !
'-traordinary *ain !
Cas) %41,000&
Common toc/ !
(aid in Capital in '-cess of (ar !
C)ec/ !
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Book Priority Market
Current /ia!ilities
"iabilities :0,000 1 :2,000
777777
777
Total Current /ia!ilities 0,000 ,000
t%er /ia!ilities
1
1
1
1
Total t%er /ia!ilities " "
Total /ia!ilities 0,000 ,000
(to$k%olders2 -3uity
Common toc/ 200,0008etained 'arnings 140,000
Total -3uity 40,000
Total /ia!ilities and -3uity 40,000
et Assets 58,000
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Assined or Allo$ated Amount
120,000
!
!
!
!%:2,000&
!
!
!
!
!
!
!
2,000
2,4001:#,000
11$,000
!
1#,00
!
!
!
!
3:0,000
!
!
41,000
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Name of Company Being Acquired Bass Company
Date of Acquisition December 31, 20X
Book Priority Market
Current Assets
Current Assets 100,000 1 120,000
11
1
Total Current Assets 100,000 10,000
Investments ! 1 !
Fixed Assets
"and #0,000 2 0,000
Buildings %net& 200,000 2 2#0,000
'quipment %net& 0,000 2 1#0,000
2
Total Fixed Assets 10,000 480,000
Intani!les
(atents 20,000 2 20,0002
2
2
2
*ood+ill N
Total Intani!les 0,000 0,000
Total Assets 40,000 60,000
Pur$%ase Pri$e
Cas) #,000
Number of )ares e-c)anged
(ar .alue of a s)are of stoc/
ar/et .alue of a s)are of stoc/
ar/et .alue of stoc/ e-c)anged !
Direct acquisition costs ncurred 1,000
Total &ur$%ase Pri$e ,000
'one Analysis
*roup otal
(riority 2,000 2,000
Nonpriority %2& #00,000 #2,000
Cumulati5e*roup otal
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(rice (aid 23,000
Assign to (riority 2,000
Assign to Nonpriority !
*ood+ill !
'-traordinary *ain #,000
Assinment and Allo$ation ($%edule Market )Fair* +alue (ercentage
Priority A$$ounts
Current Assets 120,000
! !
! !
! !
n5estments !"iabilities %:2,000&
! !
! !
! !
! !
! !
! !
! !
otal (riority 2,000
on&riority A$$ounts
"and 0,000 16 !Buildings %net& 2#0,000 #06 !
'quipment %net& 1#0,000 306 !
! ! 06 !
(atents 20,000 46 !
! ! 06 !
! ! 06 !
! ! 06 !
! ! 06 !
otal Nonpriority #00,000
*ood+ill !
'-traordinary *ain #,000
otal %s)ould equal purc)ase price&
Amountto
Allocate
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-ntry
A$$ount ame .e!it )Credit*
Current Assets 120,000
! !
! !! !
n5estments !
"iabilities %:2,000&
! !
! !
! !
! !
! !
! !
! !
"and !
Buildings %net& !'quipment %net& !
! !
(atents !
! !
! !
! !
! !
*ood+ill !
'-traordinary *ain %#,000&
Cas) %23,000&
Common toc/ !
(aid in Capital in '-cess of (ar !
C)ec/ !
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Book Priority Market
Current /ia!ilities
"iabilities :0,000 1 :2,000
777777
777
Total Current /ia!ilities 0,000 ,000
t%er /ia!ilities
1
1
1
1
Total t%er /ia!ilities " "
Total /ia!ilities 0,000 ,000
(to$k%olders2 -3uity
Common toc/ 200,0008etained 'arnings 140,000
Total -3uity 40,000
Total /ia!ilities and -3uity 40,000
et Assets 58,000
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Assined or Allo$ated Amount
120,000
!
!
!
!%:2,000&
!
!
!
!
!
!
!
2,000
!!
!
!
!
!
!
!
!
!
!
#,000
33,000
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Name of Company Being Acquired ;)ite Corporation
Date of Acquisition 9anuary 1, 20X1
Book Priority Market
Current Assets
Accounts 8ecei5able $:,000 1 $:,000
n5entory 112,000 1 120,000<t)er Current Assets ##,000 1 ##,000
1
Total Current Assets 46,000 54,000
Investments ! 1 !
Fixed Assets
'quipment %net& 2:4,000 2 30$,000
2
2
2
Total Fixed Assets 4,000 0#,000
Intani!les
rademar/ 30,000 2 2$,000n (rocess 8=D!'-pense 2 14,000
2
2
2
*ood+ill N
Total Intani!les 0,000 41,000
Total Assets 5#0,000 60,000
Pur$%ase Pri$e
Cas) #00,000
Number of )ares e-c)anged
(ar .alue of a s)are of stoc/
ar/et .alue of a s)are of stoc/
ar/et .alue of stoc/ e-c)anged !
Direct acquisition costs ncurred
Total &ur$%ase Pri$e 500,000
'one Analysis
*roup otal
(riority :,000 :,000
Nonpriority %2& 34,000 3#$,000
Cumulati5e*roup otal
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(rice (aid #00,000
Assign to (riority :,000
Assign to Nonpriority 34,000
*ood+ill 143,000
'-traordinary *ain !
Assinment and Allo$ation ($%edule Market )Fair* +alue (ercentage
Priority A$$ounts
Accounts 8ecei5able $:,000
n5entory 120,000
<t)er Current Assets ##,000
! !
n5estments !Current "iabilities %14#,000&
!
! !
! !
Bonds (ayable %100,000&
! !
! !
! !
otal (riority :,000
on&riority A$$ounts
'quipment %net& 30$,000 6 34,000! ! 06 34,000
! ! 06 34,000
! ! 06 34,000
rademar/ 2$,000 6 34,000
n (rocess 8=D!'-pense 14,000 46 34,000
! ! 06 34,000
! ! 06 34,000
! ! 06 34,000
otal Nonpriority 34,000
*ood+ill 143,000
'-traordinary *ain !
otal %s)ould equal purc)ase price&
Amountto
Allocate
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-ntry
A$$ount ame .e!it )Credit*
Accounts 8ecei5able $:,000
n5entory 120,000
<t)er Current Assets ##,000! !
n5estments !
Current "iabilities %14#,000&
! !
! !
! !
Bonds (ayable %100,000&
! !
! !
! !
'quipment %net& 30$,000
! !! !
! !
rademar/ 2$,000
n (rocess 8=D!'-pense 14,000
! !
! !
! !
*ood+ill 143,000
'-traordinary *ain !
Cas) %#00,000&
Common toc/ !
(aid in Capital in '-cess of (ar !
C)ec/ !
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Book Priority Market
Current /ia!ilities
Current "iabilities 14#,000 1 14#,000
11
777
Total Current /ia!ilities 145,000 145,000
t%er /ia!ilities
Bonds (ayable 100,000 1 100,000
1
1
1
Total t%er /ia!ilities 100,000 100,000
Total /ia!ilities 45,000 45,000
(to$k%olders2 -3uity
Common toc/ 200,000(aid in capital in e-cess of par #0,000
8etained earnings $#,000
Total -3uity 5,000
Total /ia!ilities and -3uity 5#0,000
et Assets 5#,000
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Assined or Allo$ated Amount
$:,000
120,000
##,000
!
!%14#,000&
!
!
!
%100,000&
!
!
!
:,000
30$,000!
!
!
2$,000
14,000
!
!
!
34,000
143,000
!
#00,000
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(rice (aid 2#0,000
Assign to (riority :,000
Assign to Nonpriority 241,000
*ood+ill !
'-traordinary *ain !
Assinment and Allo$ation ($%edule Market )Fair* +alue (ercentage
Priority A$$ounts
Accounts 8ecei5able $:,000
n5entory 120,000
<t)er Current Assets ##,000
! !
t c !Current "iabilities %14#,000&
! !
! !
! !
Bonds (ayable %100,000&
! !
! !
! !
otal (riority :,000
on&riority A$$ounts
'quipment %net& 30$,000 6 241,000! ! 06 241,000
! ! 06 241,000
! ! 06 241,000
rademar/ 2$,000 6 241,000
n (rocess 8=D!'-pense 14,000 46 241,000
! ! 06 241,000
! ! 06 241,000
! ! 06 241,000
otal Nonpriority 34,000
*ood+ill !
'-traordinary *ain !
otal %s)ould equal purc)ase price&
Amountto
Allocate
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-ntry
A$$ount ame .e!it )Credit*
Accounts 8ecei5able $:,000
n5entory 120,000
<t)er Current Assets ##,000! !
t c !
Current "iabilities %14#,000&
! !
! !
! !
Bonds (ayable %100,000&
! !
! !
! !
'quipment %net& 212,0
! !! !
! !
rademar/ 1,:
n (rocess 8=D!'-pense :,:#
! !
! !
! !
*ood+ill !
'-traordinary *ain !
Cas) %2#0,000&
Common toc/ !
(aid in Capital in '-cess of (ar !
C)ec/ !
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Book Priority Market
Current /ia!ilities
Current "iabilities 14#,000 1 14#,000
11
777
Total Current /ia!ilities 145,000 145,000
t%er /ia!ilities
Bonds (ayable 100,000 1 100,000
1
1
1
Total t%er /ia!ilities 100,000 100,000
Total /ia!ilities 45,000 45,000
(to$k%olders2 -3uity
Common toc/ 200,000(aid in capital in e-cess of par #0,000
8etained earnings $#,000
Total -3uity 5,000
Total /ia!ilities and -3uity 5#0,000
et Assets 5#,000
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Assined or Allo$ated Amount
$:,000
120,000
##,000
!
!%14#,000&
!
!
!
%100,000&
!
!
!
:,000
212,0!
!
!
1,:
:,:#
!
!
!
241,000
!
!
2#0,000
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Name of Company Being Acquired ;)ite Corporation
Date of Acquisition 9anuary 1, 20X1
Book Priority Market
Current Assets
Accounts 8ecei5able $:,000 1 $:,000
n5entory 112,000 1 120,000<t)er Current Assets ##,000 1 ##,000
1
Total Current Assets 46,000 54,000
Investments ! 1 !
Fixed Assets
'quipment %net& 2:4,000 2 30$,000
2
2
2
Total Fixed Assets 4,000 0#,000
Intani!les
rademar/ 30,000 2 2$,000n (rocess 8=D!'-pense 2 14,000
2
2
2
*ood+ill N
Total Intani!les 0,000 41,000
Total Assets 5#0,000 60,000
Pur$%ase Pri$e
Cas) #,000
Number of )ares e-c)anged
(ar .alue of a s)are of stoc/
ar/et .alue of a s)are of stoc/
ar/et .alue of stoc/ e-c)anged !
Direct acquisition costs ncurred
Total &ur$%ase Pri$e 5,000
'one Analysis
*roup otal
(riority :,000 :,000
Nonpriority %2& 34,000 3#$,000
Cumulati5e*roup otal
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(rice (aid #,000
Assign to (riority :,000
Assign to Nonpriority !
*ood+ill !
'-traordinary *ain 4,000
Assinment and Allo$ation ($%edule Market )Fair* +alue (ercentage
Priority A$$ounts
Accounts 8ecei5able $:,000
n5entory 120,000
<t)er Current Assets ##,000
! !
n5estments !Current "iabilities %14#,000&
! !
! !
! !
Bonds (ayable %100,000&
! !
! !
! !
otal (riority :,000
on&riority A$$ounts
'quipment %net& 30$,000 6 !! ! 06 !
! ! 06 !
! ! 06 !
rademar/ 2$,000 6 !
n (rocess 8=D!'-pense 14,000 46 !
! ! 06 !
! ! 06 !
! ! 06 !
otal Nonpriority 34,000
*ood+ill !
'-traordinary *ain 4,000
otal %s)ould equal purc)ase price&
Amountto
Allocate
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-ntry
A$$ount ame .e!it )Credit*
Accounts 8ecei5able $:,000
n5entory 120,000
<t)er Current Assets ##,000! !
n5estments !
Current "iabilities %14#,000&
! !
! !
! !
Bonds (ayable %100,000&
! !
! !
! !
'quipment %net& !
! !! !
! !
rademar/ !
n (rocess 8=D!'-pense !
! !
! !
! !
*ood+ill !
'-traordinary *ain %4,000&
Cas) %#,000&
Common toc/ !
(aid in Capital in '-cess of (ar !
C)ec/ !
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Book Priority Market
Current /ia!ilities
Current "iabilities 14#,000 1 14#,000
11
777
Total Current /ia!ilities 145,000 145,000
t%er /ia!ilities
Bonds (ayable 100,000 1 100,000
1
1
1
Total t%er /ia!ilities 100,000 100,000
Total /ia!ilities 45,000 45,000
(to$k%olders2 -3uity
Common toc/ 200,000(aid in capital in e-cess of par #0,000
8etained earnings $#,000
Total -3uity 5,000
Total /ia!ilities and -3uity 5#0,000
et Assets 5#,000
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Assined or Allo$ated Amount
$:,000
120,000
##,000
!
!%14#,000&
!
!
!
%100,000&
!
!
!
:,000
!!
!
!
!
!
!
!
!
!
!
4,000
13,000
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Name of Company Being Acquired .er/ Company
Date of Acquisition 9anuary 1, 20X1
Book Priority Market
Current Assets
Accounts 8ecei5able 200,000 1 200,000
n5entory 1#0,000 1 200,0001
1
Total Current Assets 50,000 400,000
Investments ! 1 !
Fixed Assets
"and 1#0,000 2 300,000
Buildings %net& 3#0,000 2 4#0,000
2
2
Total Fixed Assets 500,000 #50,000
Intani!les
22
2
2
2
*ood+ill N
Total Intani!les " "
Total Assets 850,000 1,150,000
Pur$%ase Pri$e
Cas)
Number of )ares e-c)anged 30,000
(ar .alue of a s)are of stoc/ 10
ar/et .alue of a s)are of stoc/ 40
ar/et .alue of stoc/ e-c)anged 1,200,000
Direct acquisition costs ncurred #,000
Total &ur$%ase Pri$e 1,05,000
'one Analysis
*roup otal
(riority 1#0,000 1#0,000
Nonpriority %2& $#0,000 :00,000
Cumulati5e*roup otal
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(rice (aid 1,20#,000
Assign to (riority 1#0,000
Assign to Nonpriority $#0,000
*ood+ill 30#,000
'-traordinary *ain !
Assinment and Allo$ation ($%edule Market )Fair* +alue (ercentage
Priority A$$ounts
Accounts 8ecei5able 200,000
n5entory 200,000
! !
! !
!
Current "iabilities %10,000& ! !
! !
! !
Bonds (ayable %100,000&
Discount on Bonds (ayable 10,000
! !
! !
otal (riority 1#0,000
on&riority A$$ounts
"and 300,000 406 $#0,000
Buildings %net& 4#0,000 06 $#0,000! ! 06 $#0,000
! ! 06 $#0,000
! ! 06 $#0,000
! ! 06 $#0,000
! ! 06 $#0,000
! ! 06 $#0,000
! ! 06 $#0,000
otal Nonpriority $#0,000
*ood+ill 30#,000
'-traordinary *ain !
otal %s)ould equal purc)ase price&
Amount to Allocate
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-ntry
A$$ount ame .e!it )Credit*
Accounts 8ecei5able 200,000
n5entory 200,000
! !
! !! !
Current "iabilities %10,000&
! !
! !
! !
Bonds (ayable %100,000&
Discount on Bonds (ayable 10,000
! !
! !
"and 300,000
Buildings %net& 4#0,000
! !! !
! !
! !
! !
! !
! !
*ood+ill 30#,000
'-traordinary *ain !
Cas) %#,000&
Common toc/ %300,000&
(aid in Capital in '-cess of (ar %:00,000&
C)ec/ !
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Book Priority Market
Current /ia!ilities
Current "iabilities 10,000 1 10,000
1777
777
Total Current /ia!ilities 160,000 160,000
t%er /ia!ilities
Bonds (ayable 100,000 1 100,000
Discount on Bonds (ayable 1 %10,000&
1
1
Total t%er /ia!ilities 100,000 0,000
Total /ia!ilities 60,000 50,000
(to$k%olders2 -3uity
Common toc/ 300,0008etained 'arnings 2:0,000
Total -3uity 50,000
Total /ia!ilities and -3uity 850,000
et Assets 00,000
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Assined or Allo$ated Amount
200,000
200,000
!
!
!
%10,000& !
!
!
%100,000&
10,000
!
!
1#0,000
300,000
4#0,000!
!
!
!
!
!
!
$#0,000
30#,000
!
1,20#,000
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Name of Company Being Acquired .er/ Company
Date of Acquisition 9anuary 1, 20X1
Book Priority Market
Current Assets
Accounts 8ecei5able 0,000 1 0,000
n5entory #,000 1 100,0001
1
Total Current Assets 165,000 180,000
Investments ! 1 !
Fixed Assets
"and #0,000 2 0,000
Buildings %net& 1:0,000 2 400,000
2
2
Total Fixed Assets 40,000 480,000
Intani!les
22
2
2
2
*ood+ill N
Total Intani!les " "
Total Assets 405,000 660,000
Pur$%ase Pri$e
Cas)
Number of )ares e-c)anged 1#,000
(ar .alue of a s)are of stoc/ 10
ar/et .alue of a s)are of stoc/ 40
ar/et .alue of stoc/ e-c)anged 00,000
Direct acquisition costs ncurred 4,000
Total &ur$%ase Pri$e 604,000
'one Analysis
*roup otal
(riority 30,000 30,000
Nonpriority %2& 40,000 #10,000
Cumulati5e*roup otal
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(rice (aid 04,000
Assign to (riority 30,000
Assign to Nonpriority 40,000
*ood+ill :4,000
'-traordinary *ain !
Assinment and Allo$ation ($%edule Market )Fair* +alue (ercentage
Priority A$$ounts
Accounts 8ecei5able 0,000
n5entory 100,000
! !
! !
n5estments !
Current "iabilities %##,000& ! !
! !
! !
Bonds (ayable %100,000&
Discount on Bonds (ayable #,000
! !
! !
otal (riority 30,000
on&riority A$$ounts
"and 0,000 1$6 40,000
Buildings %net& 400,000 36 40,000! ! 06 40,000
! ! 06 40,000
! ! 06 40,000
! ! 06 40,000
! ! 06 40,000
! ! 06 40,000
! ! 06 40,000
otal Nonpriority 40,000
*ood+ill :4,000
'-traordinary *ain !
otal %s)ould equal purc)ase price&
Amount to Allocate
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-ntry
A$$ount ame .e!it )Credit*
Accounts 8ecei5able 0,000
n5entory 100,000
! !
! !n5estments !
Current "iabilities %##,000&
! !
! !
! !
Bonds (ayable %100,000&
Discount on Bonds (ayable #,000
! !
! !
"and 0,000
Buildings %net& 400,000
! !! !
! !
! !
! !
! !
! !
*ood+ill :4,000
'-traordinary *ain !
Cas) %4,000&
Common toc/ %1#0,000&
(aid in Capital in '-cess of (ar %4#0,000&
C)ec/ !
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Book Priority Market
Current /ia!ilities
Current "iabilities ##,000 1 ##,000
1777
777
Total Current /ia!ilities 55,000 55,000
t%er /ia!ilities
Bonds (ayable 100,000 1 100,000
Discount on Bonds (ayable 1 %#,000&
1
1
Total t%er /ia!ilities 100,000 5,000
Total /ia!ilities 155,000 150,000
(to$k%olders2 -3uity
Common toc/ 100,0008etained 'arnings 1#0,000
Total -3uity 50,000
Total /ia!ilities and -3uity 405,000
et Assets 510,000
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Assined or Allo$ated Amount
0,000
100,000
!
!
!
%##,000& !
!
!
%100,000&
#,000
!
!
30,000
0,000
400,000!
!
!
!
!
!
!
40,000
:4,000
!
04,000
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Name of Company Being Acquired ;illiams ncorporated
Date of Acquisition December 31, 20X1
Book Priority Market
Current Assets
Accounts 8ecei5able #0,000 1 #0,000
n5entory 300,000 1 2#0,0001
1
Total Current Assets 50,000 00,000
Investments ! 1 !
Fixed Assets
"and 20,000 2 40,000
Buildings %net& $0,000 2 120,000
2
2
Total Fixed Assets 0,000 160,000
Intani!les
22
2
2
2
*ood+ill N
Total Intani!les " "
Total Assets 440,000 460,000
Pur$%ase Pri$e
Cas)
Number of )ares e-c)anged 20,000
(ar .alue of a s)are of stoc/ 10
ar/et .alue of a s)are of stoc/ 2#
ar/et .alue of stoc/ e-c)anged #00,000
Direct acquisition costs ncurred
Total &ur$%ase Pri$e 500,000
'one Analysis
*roup otal
(riority 20,000 20,000
Nonpriority %2& 10,000 420,000
Cumulati5e*roup otal
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(rice (aid #00,000
Assign to (riority 20,000
Assign to Nonpriority 10,000
*ood+ill 0,000
'-traordinary *ain !
Assinment and Allo$ation ($%edule Market )Fair* +alue (ercentage
Priority A$$ounts
Accounts 8ecei5able #0,000
n5entory 2#0,000
! !
! !
n5estments !
Accounts (ayable %40,000& ! !
! !
! !
! !
! !
! !
! !
otal (riority 20,000
on&riority A$$ounts
"and 40,000 2#6 10,000
Buildings %net& 120,000 $#6 10,000! ! 06 10,000
! ! 06 10,000
! ! 06 10,000
! ! 06 10,000
! ! 06 10,000
! ! 06 10,000
! ! 06 10,000
otal Nonpriority 10,000
*ood+ill 0,000
'-traordinary *ain !
otal %s)ould equal purc)ase price&
Amount to Allocate
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-ntry
A$$ount ame .e!it )Credit*
Accounts 8ecei5able #0,000
n5entory 2#0,000
! !
! !n5estments !
Accounts (ayable %40,000&
! !
! !
! !
! !
! !
! !
! !
"and 40,000
Buildings %net& 120,000
! !! !
! !
! !
! !
! !
! !
*ood+ill 0,000
'-traordinary *ain !
Cas) !
Common toc/ %200,000&
(aid in Capital in '-cess of (ar %300,000&
C)ec/ !
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Book Priority Market
Current /ia!ilities
Accounts (ayable 40,000 1 40,000
1777
777
Total Current /ia!ilities 40,000 40,000
t%er /ia!ilities
1
1
1
1
Total t%er /ia!ilities " "
Total /ia!ilities 40,000 40,000
(to$k%olders2 -3uity
Common toc/ 40,000(aid in capital in e-cess of par 110,000
8etained earnings 2#0,000
Total -3uity 400,000
Total /ia!ilities and -3uity 440,000
et Assets 40,000
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Assined or Allo$ated Amount
#0,000
2#0,000
!
!
!
%40,000& !
!
!
!
!
!
!
20,000
40,000
120,000!
!
!
!
!
!
!
10,000
0,000
!
#00,000
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Name of Company Being Acquired ;illiams ncorporated
Date of Acquisition December 31, 20X1
Book Priority Market
Current Assets
Accounts 8ecei5able #0,000 1 #0,000
n5entory 300,000 1 2#0,0001
1
Total Current Assets 50,000 00,000
Investments ! 1 !
Fixed Assets
"and 20,000 2 40,000
Buildings %net& $0,000 2 120,000
2
2
Total Fixed Assets 0,000 160,000
Intani!les
22
2
2
2
*ood+ill N
Total Intani!les " "
Total Assets 440,000 460,000
Pur$%ase Pri$e
Cas) 3#,000
Number of )ares e-c)anged
(ar .alue of a s)are of stoc/
ar/et .alue of a s)are of stoc/
ar/et .alue of stoc/ e-c)anged !
Direct acquisition costs ncurred
Total &ur$%ase Pri$e 85,000
'one Analysis
*roup otal
(riority 20,000 20,000
Nonpriority %2& 10,000 420,000
Cumulati5e*roup otal
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(rice (aid 3#,000
Assign to (riority 20,000
Assign to Nonpriority 12#,000
*ood+ill !
'-traordinary *ain !
Assinment and Allo$ation ($%edule Market )Fair* +alue (ercentage
Priority A$$ounts
Accounts 8ecei5able #0,000
n5entory 2#0,000
! !
! !
n5estments !
Accounts (ayable %40,000& ! !
! !
! !
! !
! !
! !
! !
otal (riority 20,000
on&riority A$$ounts
"and 40,000 2#6 12#,000
Buildings %net& 120,000 $#6 12#,000! ! 06 12#,000
! ! 06 12#,000
! ! 06 12#,000
! ! 06 12#,000
! ! 06 12#,000
! ! 06 12#,000
! ! 06 12#,000
otal Nonpriority 10,000
*ood+ill !
'-traordinary *ain !
otal %s)ould equal purc)ase price&
Amount to Allocate
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-ntry
A$$ount ame .e!it )Credit*
Accounts 8ecei5able #0,000
n5entory 2#0,000
! !
! !n5estments !
Accounts (ayable %40,000&
! !
! !
! !
! !
! !
! !
! !
"and 31,2#0
Buildings %net& :3,$#0
! !! !
! !
! !
! !
! !
! !
*ood+ill !
'-traordinary *ain !
Cas) %3#,000&
Common toc/ !
(aid in Capital in '-cess of (ar !
C)ec/ !
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Book Priority Market
Current /ia!ilities
Accounts (ayable 40,000 1 40,000
1777
777
Total Current /ia!ilities 40,000 40,000
t%er /ia!ilities
1
1
1
1
Total t%er /ia!ilities " "
Total /ia!ilities 40,000 40,000
(to$k%olders2 -3uity
Common toc/ 40,000(aid in capital in e-cess of par 110,000
8etained earnings 2#0,000
Total -3uity 400,000
Total /ia!ilities and -3uity 440,000
et Assets 40,000
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Assined or Allo$ated Amount
#0,000
2#0,000
!
!
!
%40,000& !
!
!
!
!
!
!
20,000
31,2#0
:3,$#0!
!
!
!
!
!
!
12#,000
!
!
3#,000
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Name of Company Being Acquired 9ansen
Date of Acquisition 9uly 1, 20X
Book Priority Market
Current Assets
Accounts 8ecei5able 1,2#0,000 1 1,2#0,000
Allo+ance for doubtful accounts !300000 1 !33$#00 n5entory 1,#00,000 1 1,200,000
(repaid nsurance 1,000 1 1,000
Total Current Assets ,468,000 ,10,500
Investments 400,#00 1 400,#00
Fixed Assets
"and #,000 2 $0,000
ac)inery and equipment %net& 1,4$3,#00 2 1,41,$#
2
2
Total Fixed Assets 1,51,500 1,11,8#5
Intani!les
22
2
2
2
*ood+ill 100,000 N
Total Intani!les 100,000 "
Total Assets 4,500,000 4,44,8#5
Pur$%ase Pri$e
Cas)
Number of )ares e-c)anged 1,000
(ar .alue of a s)are of stoc/ 10
ar/et .alue of a s)are of stoc/ 2#
ar/et .alue of stoc/ e-c)anged 4,240,000
Direct acquisition costs ncurred 12,000
Total &ur$%ase Pri$e 4,5,000
'one Analysis
*roup otal
(riority 1,0#,000 1,0#,000
Nonpriority %2& 1,:11,$# 2,:$,$#
Cumulati5e*roup otal
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(rice (aid 4,2#2,000
Assign to (riority 1,0#,000
Assign to Nonpriority 1,:11,$#
*ood+ill 1,24,12#
'-traordinary *ain !
Assinment and Allo$ation ($%edule Market )Fair* +alue (ercentage
Priority A$$ounts
Accounts 8ecei5able 1,2#0,000
Allo+ance for doubtful accounts %33$,#00&
n5entory 1,200,000
(repaid nsurance 1,000
n5estments 400,#00
Current "iabilities %1,4$#,000& ! !
! !
! !
! !
! !
! !
! !
otal (riority 1,0#,000
on&riority A$$ounts
"and $0,000 46 1,:11,$#
ac)inery and equipment %net& 1,41,$# :6 1,:11,$#! ! 06 1,:11,$#
! ! 06 1,:11,$#
! ! 06 1,:11,$#
! ! 06 1,:11,$#
! ! 06 1,:11,$#
! ! 06 1,:11,$#
! ! 06 1,:11,$#
otal Nonpriority 1,:11,$#
*ood+ill 1,24,12#
'-traordinary *ain !
otal %s)ould equal purc)ase price&
Amount to Allocate
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-ntry
A$$ount ame .e!it )Credit*
Accounts 8ecei5able 1,2#0,000
Allo+ance for doubtful accounts %33$,#00&
n5entory 1,200,000
(repaid nsurance 1,000n5estments 400,#00
Current "iabilities %1,4$#,000&
! !
! !
! !
! !
! !
! !
! !
"and $0,000
ac)inery and equipment %net& 1,41,$#
! !! !
! !
! !
! !
! !
! !
*ood+ill 1,24,12#
'-traordinary *ain !
Cas) %12,000&
Common toc/ %10,000&
(aid in Capital in '-cess of (ar %4,00,000&
C)ec/ !
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Book Priority Market
Current /ia!ilities
Current "iabilities 1,4$#,000 1 1,4$#,000
11
1
Total Current /ia!ilities 1,4#5,000 1,4#5,000
t%er /ia!ilities
1
1
1
1
Total t%er /ia!ilities " "
Total /ia!ilities 1,4#5,000 1,4#5,000
(to$k%olders2 -3uity
Common toc/ 1,200,0008etained earnings 1,2#,000
Total -3uity ,05,000
Total /ia!ilities and -3uity 4,500,000
et Assets ,6#,8#5
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Assined or Allo$ated Amount
1,2#0,000
%33$,#00&
1,200,000
1,000
400,#00
%1,4$#,000& !
!
!
!
!
!
!
1,0#,000
$0,000
1,41,$#!
!
!
!
!
!
!
1,:11,$#
1,24,12#
!
4,2#2,000
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Name of Company Being Acquired mit)
Date of Acquisition Dece,ber 31, 20X1
Book Priority Market
Current Assets
Notes 8ecei5able 24,000 1 24,000
Accounts recei5able #,000 1 #,000 n5entory 31,000 1 30,000
<t)er Current Assets 1,000 1 1#,000
Total Current Assets 1,000 15,000
Investments #,000 1 3,000
Fixed Assets
"and 32,000 2 ##,000
Building 24#,000 2 2$#,000
'quipment 3$,000 2 42,000
2
Total Fixed Assets 664,000 #56,000
Intani!les
(atents 23,000 2 20,000rade names 10,000 2 1#,000
2
2
2
*ood+ill 4#,000 N
Total Intani!les #8,000 5,000
Total Assets 6,000 #,000
Pur$%ase Pri$e
Cas) #0,000
Number of )ares e-c)anged
(ar .alue of a s)are of stoc/
ar/et .alue of a s)are of stoc/
ar/et .alue of stoc/ e-c)anged !
Direct acquisition costs ncurred 20,000
Total &ur$%ase Pri$e 600,000
'one Analysis
*roup otal
(riority %23,#00& %23,#00&
Nonpriority %2& $:1,000 #0$,#00
Cumulati5e*roup otal
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(rice (aid 00,000
Assign to (riority %23,#00&
Assign to Nonpriority $:1,000
*ood+ill :2,#00
'-traordinary *ain !
Assinment and Allo$ation ($%edule Market )Fair* +alue (ercentage
Priority A$$ounts
Notes 8ecei5able 24,000
Accounts recei5able #,000
n5entory 30,000
<t)er Current Assets 1#,000
n5estments 3,000
Accounts payable %4#,000& (ayroll and benefit!related liabilities %12,#00&
Debt maturing in one year %10,000&
! !
"ong!term debt %24,000&
(ayroll and benefit!related liabilities %1#,000&
! !
! !
otal (riority %23,#00&
on&riority A$$ounts
"and ##,000 $6 $:1,000
Building 2$#,000 3#6 $:1,000'quipment 42,000 #46 $:1,000
! ! 06 $:1,000
(atents 20,000 36 $:1,000
rade names 1#,000 26 $:1,000
! ! 06 $:1,000
! ! 06 $:1,000
! ! 06 $:1,000
otal Nonpriority $:1,000
*ood+ill :2,#00
'-traordinary *ain !
otal %s)ould equal purc)ase price&
Amount to Allocate
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-ntry
A$$ount ame .e!it )Credit*
Notes 8ecei5able 24,000
Accounts recei5able #,000
n5entory 30,000
<t)er Current Assets 1#,000n5estments 3,000
Accounts payable %4#,000&
(ayroll and benefit!related liabilities %12,#00&
Debt maturing in one year %10,000&
! !
"ong!term debt %24,000&
(ayroll and benefit!related liabilities %1#,000&
! !
! !
"and ##,000
Building 2$#,000
'quipment 42,000! !
(atents 20,000
rade names 1#,000
! !
! !
! !
*ood+ill :2,#00
'-traordinary *ain !
Cas) %00,000&
Common toc/ !
(aid in Capital in '-cess of (ar !
C)ec/ !
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Book Priority Market
Current /ia!ilities
Accounts payable 4#,000 1 4#,000
(ayroll and benefit!related liabilities 12,#00 1 12,#00Debt maturing in one year 10,000 1 10,000
1
Total Current /ia!ilities 6#,500 6#,500
t%er /ia!ilities
"ong!term debt 24,000 1 24,000
(ayroll and benefit!related liabilities 1#,000 1 1#,000
1
1
Total t%er /ia!ilities 404,000 404,000
Total /ia!ilities 4#1,500 4#1,500
(to$k%olders2 -3uity
Common toc/ 100,000(aid in capital in e-cess of par 2#0,000
8etained earnings 114,#00
Total -3uity 464,500
Total /ia!ilities and -3uity 6,000
et Assets 50#,500
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Assined or Allo$ated Amount
24,000
#,000
30,000
1#,000
3,000
%4#,000& %12,#00&
%10,000&
!
%24,000&
%1#,000&
!
!
%23,#00&
##,000
2$#,00042,000
!
20,000
1#,000
!
!
!
$:1,000
:2,#00
!
00,000
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Name of Company Being Acquired yl5ester Corporation
Date of Acquisition December 31, 20X1
Book Priority Market
Current Assets
Notes 8ecei5able 33,000 1 33,000
n5entory :,000 1 0,000 <t)er Current Assets 1#,000 1 1#,000
1
Total Current Assets 1#,000 18,000
Investments 3,000 1 ##,000
Fixed Assets
"and 1#,000 2 :0,000
Building 11#,000 2 1$0,000
'quipment 2#,000 2 2#0,000
.e)icles 32,000 2 2#,000
Total Fixed Assets 418,000 55,000
Intani!les
>ranc)ise #,000 2 $0,0002
2
2
2
*ood+ill N
Total Intani!les 56,000 #0,000
Total Assets 64#,000 #88,000
Pur$%ase Pri$e
Cas) 2:0,000
Number of )ares e-c)anged 10,000
(ar .alue of a s)are of stoc/ 2
ar/et .alue of a s)are of stoc/ 20
ar/et .alue of stoc/ e-c)anged 200,000
Direct acquisition costs ncurred
Total &ur$%ase Pri$e 40,000
'one Analysis
*roup otal
(riority %11,000& %11,000&
Nonpriority %2& 0#,000 4$,000
Cumulati5e*roup otal
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(rice (aid 4:0,000
Assign to (riority %11,000&
Assign to Nonpriority 0#,000
*ood+ill 3,000
'-traordinary *ain !
Assinment and Allo$ation ($%edule Market )Fair* +alue (ercentage
Priority A$$ounts
Notes 8ecei5able 33,000
n5entory 0,000
<t)er Current Assets 1#,000
! !
n5estments ##,000
Accounts payable %3,000& a-es payable %1#,000&
nterest payable %3,000&
! !
Bonds payable %2#0,000&
Discount on bonds payable 30,000
! !
! !
otal (riority %11,000&
on&riority A$$ounts
"and :0,000 1#6 0#,000
Building 1$0,000 26 0#,000'quipment 2#0,000 416 0#,000
.e)icles 2#,000 46 0#,000
>ranc)ise $0,000 126 0#,000
! ! 06 0#,000
! ! 06 0#,000
! ! 06 0#,000
! ! 06 0#,000
otal Nonpriority 0#,000
*ood+ill 3,000
'-traordinary *ain !
otal %s)ould equal purc)ase price&
Amount to Allocate
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-ntry
A$$ount ame .e!it )Credit*
Notes 8ecei5able 33,000
n5entory 0,000
<t)er Current Assets 1#,000
! !n5estments ##,000
Accounts payable %3,000&
a-es payable %1#,000&
nterest payable %3,000&
! !
Bonds payable %2#0,000&
Discount on bonds payable 30,000
! !
! !
"and :0,000
Building 1$0,000
'quipment 2#0,000.e)icles 2#,000
>ranc)ise $0,000
! !
! !
! !
! !
*ood+ill 3,000
'-traordinary *ain !
Cas) %2:0,000&
Common toc/ %20,000&
(aid in Capital in '-cess of (ar %10,000&
C)ec/ !
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Book Priority Market
Current /ia!ilities
Accounts payable 3,000 1 3,000
a-es payable 1#,000 1 1#,000nterest payable 3,000 1 3,000
777
Total Current /ia!ilities 81,000 81,000
t%er /ia!ilities
Bonds payable 2#0,000 1 2#0,000
Discount on bonds payable %1,000& 1 %30,000&
1
1
Total t%er /ia!ilities ,000 0,000
Total /ia!ilities 1,000 01,000
(to$k%olders2 -3uity
Common toc/ #0,000(aid in capital in e-cess of par 200,000
8etained earnings 4,000
Total -3uity 4,000
Total /ia!ilities and -3uity 64#,000
et Assets 48#,000
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Assined or Allo$ated Amount
33,000
0,000
1#,000
!
##,000
%3,000& %1#,000&
%3,000&
!
%2#0,000&
30,000
!
!
%11,000&
:0,000
1$0,0002#0,000
2#,000
$0,000
!
!
!
!
0#,000
3,000
!
4:0,000
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Name of Company Being Acquired 9ames Company
Date of Acquisition 9anuary 1, 20X2
Book Priority Market
Current Assets
Accounts recie5able $,000 1 $,000
n5entory 3,000 1 30,000 <t)er Current Assets 14,000 1 ,000
1
Total Current Assets 1#,000 15,000
Investments 1
Fixed Assets
'quipment 10#,000 2 0,000
.e)icles :,000 2 $1,000
2
2
Total Fixed Assets 1#4,000 151,000
Intani!les
ailing lists 4,000 2 !2
2
2
2
*ood+ill N
Total Intani!les 4,000 "
Total Assets 15,000 #6,000
Pur$%ase Pri$e
Cas) 23,000
Number of )ares e-c)anged
(ar .alue of a s)are of stoc/
ar/et .alue of a s)are of stoc/
ar/et .alue of stoc/ e-c)anged !
Direct acquisition costs ncurred
Total &ur$%ase Pri$e ,000
'one Analysis
*roup otal
(riority 2#,000 2#,000
Nonpriority %2& 1#1,000 1$,000
Cumulati5e*roup otal
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(rice (aid 23,000
Assign to (riority 2#,000
Assign to Nonpriority !
*ood+ill !
'-traordinary *ain 2,000
Assinment and Allo$ation ($%edule Market )Fair* +alue (ercentage
Priority A$$ounts
Accounts recie5able $,000
n5entory 30,000
<t)er Current Assets ,000
! !
n5estments !
Accounts payable %#,000& Accrued liabilities %14,000&
! !
! !
Notes payable %30,000&
! !
! !
! !
otal (riority 2#,000
on&riority A$$ounts
'quipment 0,000 #36 !
.e)icles $1,000 4$6 !! ! 06 !
! ! 06 !
ailing lists ! 06 !
! ! 06 !
! ! 06 !
! ! 06 !
! ! 06 !
otal Nonpriority 1#1,000
*ood+ill !
'-traordinary *ain 2,000
otal %s)ould equal purc)ase price&
Amount to Allocate
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-ntry
A$$ount ame .e!it )Credit*
Accounts recie5able $,000
n5entory 30,000
<t)er Current Assets ,000
! !n5estments !
Accounts payable %#,000&
Accrued liabilities %14,000&
! !
! !
Notes payable %30,000&
! !
! !
! !
'quipment !
.e)icles !
! !! !
ailing lists !
! !
! !
! !
! !
*ood+ill !
'-traordinary *ain %2,000&
Cas) %23,000&
Common toc/ !
(aid in Capital in '-cess of (ar !
C)ec/ !
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Book Priority Market
Current /ia!ilities
Accounts payable #,000 1 #,000
Accrued liabilities 14,000 1 14,0001
777
Total Current /ia!ilities #0,000 #0,000
t%er /ia!ilities
Notes payable 30,000 1 30,000
1
1
1
Total t%er /ia!ilities 0,000 0,000
Total /ia!ilities 100,000 100,000
(to$k%olders2 -3uity
Common toc/ 0,000(aid in capital in e-cess of par 100,000
8etained earnings ##,000
Total -3uity 15,000
Total /ia!ilities and -3uity 15,000
et Assets 1#6,000
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Assined or Allo$ated Amount
$,000
30,000
,000
!
!
%#,000& %14,000&
!
!
%30,000&
!
!
!
2#,000
!
!!
!
!
!
!
!
!
!
!
2,000
2$,000
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Name of Company Being Acquired ris Company
Date of Acquisition 9anuary 1, 20X2
Book Priority Market
Current Assets
Accounts recie5able 1#,000 1 1#,000
n5entory 3,000 1 40,000 (repaid e-penses 12,000 1 12,000
1
Total Current Assets 65,000 6#,000
Investments 1:,000 1 33,000
Fixed Assets
"and 30,000 2 40,000
Building $0,000 2 #,000
'quipment #,000 2 #0,000
2
Total Fixed Assets 156,000 1#5,000
Intani!les
(atent 1$,000 2 12,000Copyrig)t 22,000 2 2,000
2
2
2
*ood+ill ,000 N
Total Intani!les 4#,000 8,000
Total Assets 8#,000 1,000
Pur$%ase Pri$e
Cas)
Number of )ares e-c)anged 10,000
(ar .alue of a s)are of stoc/ #
ar/et .alue of a s)are of stoc/ 2$
ar/et .alue of stoc/ e-c)anged 2$0,000
Direct acquisition costs ncurred 10,000
Total &ur$%ase Pri$e 80,000
'one Analysis
*roup otal
(riority 3,000 3,000
Nonpriority %2& 213,000 24:,000
Cumulati5e*roup otal
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(rice (aid 20,000
Assign to (riority 3,000
Assign to Nonpriority 213,000
*ood+ill 31,000
'-traordinary *ain !
Assinment and Allo$ation ($%edule Market )Fair* +alue (ercentage
Priority A$$ounts
Accounts recie5able 1#,000
n5entory 40,000
(repaid e-penses 12,000
! !
n5estments 33,000
Accounts payable %22,000& nterest (ayable %2,000&
! !
! !
"ong!erm Notes (ayable %40,000&
! !
! !
! !
otal (riority 3,000
on&riority A$$ounts
"and 40,000 1:6 213,000
Building #,000 406 213,000'quipment #0,000 236 213,000
! ! 06 213,000
(atent 12,000 6 213,000
Copyrig)t 2,000 126 213,000
! ! 06 213,000
! ! 06 213,000
! ! 06 213,000
otal Nonpriority 213,000
*ood+ill 31,000
'-traordinary *ain !
otal %s)ould equal purc)ase price&
Amount to Allocate
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-ntry
A$$ount ame .e!it )Credit*
Accounts recie5able 1#,000
n5entory 40,000
(repaid e-penses 12,000
! !n5estments 33,000
Accounts payable %22,000&
nterest (ayable %2,000&
! !
! !
"ong!erm Notes (ayable %40,000&
! !
! !
! !
"and 40,000
Building #,000
'quipment #0,000! !
(atent 12,000
Copyrig)t 2,000
! !
! !
! !
*ood+ill 31,000
'-traordinary *ain !
Cas) %10,000&
Common toc/ %#0,000&
(aid in Capital in '-cess of (ar %220,000&
C)ec/ !
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Book Priority Market
Current /ia!ilities
Accounts payable 22,000 1 22,000
nterest (ayable 2,000 1 2,0001
777
Total Current /ia!ilities 4,000 4,000
t%er /ia!ilities
"ong!erm Notes (ayable 40,000 1 40,000
1
1
1
Total t%er /ia!ilities 40,000 40,000
Total /ia!ilities 64,000 64,000
(to$k%olders2 -3uity
Common toc/ 40,000(aid in capital in e-cess of par 120,000
8etained earnings 3,000
Total -3uity ,000
Total /ia!ilities and -3uity 8#,000
et Assets 4,000
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Assined or Allo$ated Amount
1#,000
40,000
12,000
!
33,000
%22,000& %2,000&
!
!
%40,000&
!
!
!
3,000
40,000
#,000#0,000
!
12,000
2,000
!
!
!
213,000
31,000
!
20,000
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