User Account

All Pages

What amount of goodwill is attributable to this purchase

Assignment Help Financial Accounting
Reference no: EM132867767

Question - Maxwell Inc. acquired 20% of the common stock of Magic Inc. on January 1, 2020. 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.

1) What amount of goodwill is attributable to this purchase?

2) What amount should Maxwell report for its equity in Magic's earnings on its income statement for 2020?

3) What amount should Maxwell report for its investment in Magic on its balance sheet at December 31, 2021?

Reference no: EM132867767

Questions Cloud

Why employees leave an organization : Outline a retention strategy that HR could use to reduce the number of employees who leave an organization for the three reasons you identified.
Stability-innovation-ethical organizational communication : Describe the concepts of organizational stability and organizational innovation. Explain each of the three principles of ethical organizational communication
Outline the major benefits of organizing a union for company : Create a mission and objective statement for a strategic plan to organize a union for group. Outline the major benefits of organizing a union for company
What advice would give to the management team to deal : Consider at least 3 challenges and constraints in recruiting and discuss. What advice would you give to the management team to deal with the challenges
What amount of goodwill is attributable to this purchase : During the next two years Magic reported income of $1,800,000 for 2020 and $1,985,000 for 2021. What amount of goodwill is attributable to this purchase
Research and profile entrepreneur : How has your subject's personality helped him or her to succeed in his or her chosen field? What is your subject's business?
Provide a brief description of the traumatic events : Describe the interventions discussed in the articles and explain how they addressed the psychosocial issues and needs of the individuals affected by the trauma.
Why are competency models important to human resources : Discuss the various HR competency models. Why are competency models important to Human Resources? What are the challenges associated with implementing
Leadership and teams-theoretical leadership models : Synthesize the topics of leadership and teams by crafting an essay in which, using supporting materials,

Reviews

Write a Review

Financial Accounting Questions & Answers

  Financial statement analysis and preparation

Financial Statement Analysis and Preparation

  Shareholder of a company

Describe the ways that a person can become a shareholder of a company. Why Wal-Mart would split its stock?

  Financial and accounting principles

An understanding of financial and accounting principles can be a valuable tool for managers. While not all managers will find themselves calculating financial ratios or preparing annual financial data.

  Prepare a statement of cash flow using the direct method

Prepare a Statement of Cash Flow using the Direct Method and Prepare the Operations section of the Statement of Cash Flow using the Indirect Method.

  Financial accounting assignment

This assignment has one case study and two question apart from case study. Questions related to document Liquidation question and Company financial statements question - Torquay Limited

  Prepare general journal entries for goela

Prepare general journal entries for Goela Ltd

  Principles of financial accounting

Prepare the journal entry to record the acquisition of the assets.

  Prepare general journal entries to record the transactions

Prepare general journal entries to record the transactions, assuming use of the periodic inventory system

  Global reporting initiative

Compare the view espoused by the economist Milton Friedman about the social responsibilities of business with the views express by Stigler.

  Explain the iasb conceptual frameworks

Explain the IASB Conceptual Framework's perspective of users and their decisions.

  Determine the company''s financial statements

T he focus of the report is to determine the extent to which you are comfortable relying on the financial statements as presented by management .

  Computation of free cash flow

Computation of Free Cash Flow

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd