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Company S has no long-term marketable securities. Assume the following scenarios:
Case A
Assume that P Company paid $130,000 cash for 100% of the net assets of S Company.
S Company
Assets
Current Assets Long-lived Assets Liabilities Net Assets
Book Value $15,000 $85,000 $20,000 $80,000
Fair Value 20,000 130,000 30,000 120,000
Case B
Assume that P Company paid $110,000 cash for 100% of the net assets of S Company.
S Company
Assets
Current Assets Long-lived Assets Liabilities Net Assets
Book Value $15,000 $85,000 $20,000 $80,000
Fair Value 30,000 80,000 20,000 90,000
Case C
Assume that P Company paid $15,000 cash for 100% of the net assets of S Company.
S Company
Assets
Current Assets Long-lived Assets Liabilities Net Assets
Book Value $15,000 $85,000 $20,000 $80,000
Fair Value 20,000 40,000 40,000 20,000
Required: Complete the following schedule by listing the amount that would be recorded on P’s books.
| Assets | Liabilities | |||
| Goodwill | Current Assets | Long-lived Assets | ||
| Case A | ||||
| Case B | ||||
| Case C | ||||
Expert Answer
