The mineral rights owned by Saypal have increased in value since the date of acquisition and...
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The mineral rights owned by Saypal have increased in value since the date of acquisition and were worth $928,600 at December 31, Year 7. • On January 2, Year 5, Paypal sold equipment to Saypal for $540,000. The equipment had a carrying amount of $432,000 at the time of the sale. The remaining useful life of the equipment was 5 years. • The Year 7 opening inventories of Paypal contained $504,000 of merchandise purchased from Saypal during Year 6. Saypal had recorded a gross profit of $201,600 on this merchandise. . During Year 7, Saypal's sales to Paypal totalled $1,004,000. These sales were made at a gross profit rate of 35%. • Paypal's ending inventory contains $304,000 of merchandise purchased from Saypal. . • The Year 7 opening inventories of Saypal contained $300,000 of merchandise purchased from Paypal during Year 6. Paypal had recorded a gross profit of $75,000 on this merchandise. • During Year 7, Paypal's sales to Saypal totalled $800,000. These sales were made at a gross profit rate of 25%. • Saypal's ending inventory contains $55,000 of gross profit recorded by Paypal. • On January 2, Year 5, Paypal issued 8%, 7 year bonds with a face value of $500,000 for $521,000. Interest is paid annually on December 31. On January 2, Year 6, Saypal purchased one-half of this issue on the open market at a cost of $238,000. • Other expenses include depreciation expense. • Tax allocation will be at a rate of 40%. Required: 1. Calculate acquisition differential and goodwill. The mineral rights owned by Saypal have increased in value since the date of acquisition and were worth $928,600 at December 31, Year 7. • On January 2, Year 5, Paypal sold equipment to Saypal for $540,000. The equipment had a carrying amount of $432,000 at the time of the sale. The remaining useful life of the equipment was 5 years. • The Year 7 opening inventories of Paypal contained $504,000 of merchandise purchased from Saypal during Year 6. Saypal had recorded a gross profit of $201,600 on this merchandise. . During Year 7, Saypal's sales to Paypal totalled $1,004,000. These sales were made at a gross profit rate of 35%. • Paypal's ending inventory contains $304,000 of merchandise purchased from Saypal. . • The Year 7 opening inventories of Saypal contained $300,000 of merchandise purchased from Paypal during Year 6. Paypal had recorded a gross profit of $75,000 on this merchandise. • During Year 7, Paypal's sales to Saypal totalled $800,000. These sales were made at a gross profit rate of 25%. • Saypal's ending inventory contains $55,000 of gross profit recorded by Paypal. • On January 2, Year 5, Paypal issued 8%, 7 year bonds with a face value of $500,000 for $521,000. Interest is paid annually on December 31. On January 2, Year 6, Saypal purchased one-half of this issue on the open market at a cost of $238,000. • Other expenses include depreciation expense. • Tax allocation will be at a rate of 40%. Required: 1. Calculate acquisition differential and goodwill.
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To calculate the acquisition differential and goodwill we need to determine the fair value of Saypals net identifiable assets and compare it to the co... View the full answer
Related Book For
Modern Advanced Accounting In Canada
ISBN: 9781259066481
7th Edition
Authors: Hilton Murray, Herauf Darrell
Posted Date:
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