On Dec 31, 2022, Pipsqueak Company decides to acquire the ASSETS of Squeaky Toy Company. On...

 

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On Dec 31, 2022, Pipsqueak Company decides to acquire the ASSETS of Squeaky Toy Company. On that date Squeaky Toy Company had the following balances: BOOK Value Fair Market Value Current Assets Building Accum Dep-B Equipment Accum dep Current Liabilities $135,000 $450,000 ($150,000) $360,000 ($50,000) ($100,000) ($200,000) ($50,000) ($100,000) ($295,000) $125,000 $625,000 $350,000 Bonds Payable Com Stock ($100,000) ($175,000) PIC R/E During 2022, Squeaky Toy Company earned a profit of $250,000. The seller's industry expects a Return on Investment of 8%. Required: a. Calculate the price if Squeaky Toy Company asks for 5 years of excess earnings. b. Record the purchase of the company on the books of Pipsqueak c. Record the sale on the books of Squeaky Toy. On Dec 31, 2022, Pipsqueak Company decides to acquire the ASSETS of Squeaky Toy Company. On that date Squeaky Toy Company had the following balances: BOOK Value Fair Market Value Current Assets Building Accum Dep-B Equipment Accum dep Current Liabilities $135,000 $450,000 ($150,000) $360,000 ($50,000) ($100,000) ($200,000) ($50,000) ($100,000) ($295,000) $125,000 $625,000 $350,000 Bonds Payable Com Stock ($100,000) ($175,000) PIC R/E During 2022, Squeaky Toy Company earned a profit of $250,000. The seller's industry expects a Return on Investment of 8%. Required: a. Calculate the price if Squeaky Toy Company asks for 5 years of excess earnings. b. Record the purchase of the company on the books of Pipsqueak c. Record the sale on the books of Squeaky Toy.

Answer rating: 100% (QA)

0 Priee i4 squeaky Toy Company aiki for 5years of exces earnings Purchase coneideration AuettL... View the full answer