Goodwill results from the purchase of one firm by another for a price that is greater than the fair value of the net assets acquired. On January 1, 2014, XYZ Co. purchased Red MNO Co. for $1,500,000 when the net assets were valued at $1,200,000. Goodwill will be tested annually for impairment. Assume that after the first year there was an impairment of $25,000.
Required:
(a.) Compute the value of goodwill to be recorded on the books of Blue Grass Company upon the purchase of the business.
(b.) What is impairment and how is the first year's impairment recorded in the books?
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- A firm's net income is $330,000 on sales of $31.5 million. Average assets for the period were $7 million. For the year, what was the firm's:
margin,turnover,and ROI?
-n January 1, 2015, the balance in Big River Co.'s Allowance for Bad Debts account was $5,500. During the year, a total of $3,600 of delinquent accounts receivable were written off as bad debts. The balance in the Allowance for Bad Debts account at December 31, 2014, was $7,500. What was the total amount of bad debts expense recognized during the year?
-Prepare a bank reconciliation for Pizza, Inc., as of June 30 from the following information:
(a.) The June 30 balance shown on the bank statement is $2,888.
(b.) Outstanding checks at June 30 totaled $175.
(c.) A deposit of $212 made on June 30 was not included in the balance shown on the bank statement.
(d.) The bank statement contained an adjustment of $204 for a note receivable collected by the bank on behalf of Pizza, Inc. ($191 principal and $13 interest).
(e.) A bank charge of $17 was made to the account during June. Although the company was expecting a charge, the amount was not known until the bank statement arrived.
(f.) The bank erroneously charged a $170 check of Cheese, Inc., against the Pizza, Inc., bank account.
(g.) The June 30 balance in the general ledger Cash account, before reconciliation, is $3,013.
(h.) The bank statement included a notice that a customer's check for $86 that had been deposited on June 14 had been returned NSF.
--Joe's Sales & Service acquired a new machine that cost $45,000 in early 2013. The machine is expected to have a five-year useful life and is estimated to have a salvage value of $5,000 at the end of its life. (Round your final answers to the nearest dollar.)
(a.) Using the straight-line depreciation method, calculate the depreciation expense to be recognized in the second year of the machine's life and calculate the accumulated depreciation after the third year of the machine's life.
(b.) Using the double-declining-balance depreciation method, calculate the depreciation expense for the third year of the machine's life and the net book value of the machine at this point in time.