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# Crystal, Incorporated: Acquisition Cost, Goodwill

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Crystal, Incorporated acquired 100 percent of the assets and liabilities of Design, Inc. by issuing its common stock in a business combination. At the time of the combination, the fair values of Design's net assets and Crystal's common stock were \$440,000 and \$410,000, respectively; the book value of Design's net assets was \$320,000, and the par value of Crystal's stock was \$160,000. Included in Design's net assets was equipment with a fair value of \$300,000 and a book value of \$180,000.

Question 1
Based on the information given above, the excess of Crystal's acquisition cost over the book value of Design's net assets is:
\$(30,000).
\$30,000.
\$90,000.
\$120,000.

Question 2
Based on the information given above, the amount to be reported as goodwill subsequent to the combination is:
\$0.
\$(30,000).
\$30,000.
\$90,000.

Question 3
Consider the information given above. If the total book value of Crystal's net assets is \$900,000, what is the total amount of net assets of both companies combined?
\$1,220,000.
\$1,310,000.
\$1,340,000.
\$1,540,000.

#### Solution Preview

1. Based on the information given above, the excess of Crystal's acquisition cost over the book value of Design's net assets is:

Guidance:
FV of assets acquired \$440,000
Fair value of consideration given \$410,000 (acquisition ...

#### Solution Summary

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