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P8-9 Computing Goodwill from the Purchase of a Business and Related Depreciation and Amortization LO3, 6
[The following information applies to the questions displayed below.]
| The notes to a recent annual report from Weebok Corporation included the following: |
| Business Acquisitions |
| Sport Shoes, Inc. |
|
Assume that Weebok acquired Sport Shoes on January 5, 2010. Weebok acquired the name of the company and all of its assets, for $511,000 cash. Weebok did not assume the liabilities. The transaction was closed on January 5, 2010, at which time the balance sheet of Sport Shoes reflected the following book values and an independent appraiser estimated the following market values for the assets: |
| January 5, 2010 | Book Value | Market Value | |
| Accounts receivable (net) | 3 | 9,000 | |
| Inventory | 222,000 | 183,000 | |
| Fixed assets (net) | 30,000 | 19,000 | |
| Other assets | 17,000 | ||
| Total assets | 300,000 | ||
| Liabilities | 59,000 | ||
| Stockholders’ equity | 241,000 | ||
| Total liabilities and stockholders’ equity |
|
Market values for the purchased assets were provided to Weebok by an independent appraiser.
P8-9 Part 1 Required:1.Compute the amount of goodwill resulting from the purchase. (Hint: Assets are purchased at market value in conformity with the cost principle.). (Omit the “$” sign in your response.) |
