Financial Accounting - Bond & Goodwill Calculation
Not what you're looking for?
3 Staffing Company purchased net assets (i.e., assets minus liabilities) of Time Management Inc. for $390,000. Time Management Inc. is a retailer of software, books, seminars and related items. Its net asset has been carried on its books at a total of $183,000. An appraisal of all of Time Management Inc. assets and liabilities revealed a net fair market value of $299,000. Staffing Company is willing to pay extra because of Time Managementâ??s very loyal retail customers, most of who have dealt exclusively with the company for many years and also their loyal employees who have been with the company for many years. What is the amount of goodwill that Staffing Company should record at acquisition of the Time Management Inc.?
4. On Jan. 1, Highland Corporation purchased $85,000 of 6%, three-year bonds as a long term investment. Interest is paid annually. The company is not involved in active trading of securities.
a.What accounts are increased and/or decreased by the purchase of this bond and and by which amount?
b.What accounts are increased and/or decreased by the receipt of the first interest payment on the bonds part A and by which amount?
c.Assuming the company intends to hold the bonds to maturity, what accounts are increased and/or decreased at the end of the first year if the market value of the bonds is $88,500 at that time?
d.How would your answer part C differ if the company does not intend to hold the bonds to maturity? What accounts would be increased and/or decreased at the end of the first year then and by what amount?
Purchase this Solution
Solution Summary
The solution answer Financial Accounting problems related to Staffing Company, Highland Corporation.
Solution Preview
Solution 3
Goodwill will be recorded as difference between amout paid and net fair market value of the asset. That is the goodwill will be $91,000 (390000-299000).
Solution 4
a - The company's cash account will reduce by $85k and its long term investment asset (Invesment in Bonds A/c) will increase by same amount. The bonds can be ...
Purchase this Solution
Free BrainMass Quizzes
Motivation
This tests some key elements of major motivation theories.
Employee Orientation
Test your knowledge of employee orientation with this fun and informative quiz. This quiz is meant for beginner and advanced students as well as professionals already working in the HR field.
Learning Lean
This quiz will help you understand the basic concepts of Lean.
Lean your Process
This quiz will help you understand the basic concepts of Lean.
Social Media: Pinterest
This quiz introduces basic concepts of Pinterest social media