Purchase Solution

King Incorporated

Not what you're looking for?

Ask Custom Question

On January 1, 2004, baker, Inc. purchased 40 percent of the outstanding stock of King, Inc. for $1.5 million. The book value of the net assets of net assets of King, Inc. on that date was $3.0 million. The market values of the accounts comprising net assets were equal to their book values, except for the following:

Book Value Market Value
Equipment $250,000 $200,000
Building $650,000 $800,000
Notes payable $250,000 $220,000

Problem:
Calculate the purchase differential and prepare a schedule showing its allocation to specific assets and liability accounts.

Purchase this Solution

Solution Summary

This solution contains calculations to aid you in understanding the solution to this question about market values.

Solution Preview

Purchase differential is: (200,000 - 250,000) + (800,000 - 650,000) ...

Purchase this Solution


Free BrainMass Quizzes
IPOs

This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)

Marketing Research and Forecasting

The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.

Operations Management

This quiz tests a student's knowledge about Operations Management

Academic Reading and Writing: Critical Thinking

Importance of Critical Thinking

Transformational Leadership

This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.