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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.

    © BrainMass Inc. brainmass.com June 4, 2020, 4:17 am ad1c9bdddf
    https://brainmass.com/business/accounting/crystal-incorporated-acquisition-cost-goodwill-554181

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    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 ...

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