Use the following information to answer bellow Questions
Polypipe Company acquired 80% of Svedex Company's voting stock for $95,000 in cash. The noncontrolling interest had an estimated fair value of $20,000. Some of Svedex's identifiable assets and liabilities at the date of acquisition had fair values that were different from reported values, as follows:
$$\begin{array} { | l | r | r | }
\hline & \text { Book Value } & { \text { Fair Value } } \
\hline \text { Property, net } & \$ 6,000 & \$ 4,000 \
\hline \text { Licensing ag reements } & 1,000 & 25,000 \
\hline
\end{array}$$ Svedex's total shareholders' equity at the date of acquisition was as follows:
$\begin{array}{lr}
\text { Capital stock } & \$ 5,000 \
\text { Retained deficit } & (400) \
\text { Treasury stock } & \underline{(\$ 50)} \
\text { Total } & \$ 4,550
\end{array}$

-Total goodwill from this acquisition is:

Question

Use the following information to answer bellow Questions
Polypipe Company acquired 80% of Svedex Company's voting stock for $95,000 in cash. The noncontrolling interest had an estimated fair value of $20,000. Some of Svedex's identifiable assets and liabilities at the date of acquisition had fair values that were different from reported values, as follows:
 $$\begin{array} { | l | r | r | } 
\hline & \text { Book Value } &  { \text { Fair Value } } \
\hline \text { Property, net } & \$ 6,000 & \$ 4,000 \
\hline \text { Licensing ag reements } & 1,000 & 25,000 \
\hline
\end{array}$$ Svedex's total shareholders' equity at the date of acquisition was as follows:
 $\begin{array}{lr}
\text { Capital stock } & \$ 5,000 \
\text { Retained deficit } & (400) \
\text { Treasury stock } & \underline{(\$ 50)} \
\text { Total } & \$ 4,550
\end{array}$

-Total goodwill from this acquisition is:

Quizplus · Accepted Answer

To calculate the total goodwill from the acquisition, we first determine the fair value of the net assets acquired and then compare this to the purchase price. The fair value adjustments are as follows: Property decreases by $2,000 ($6,000 book value - $4,000 fair value) and Licensing agreements increase by $24,000 ($25,000 fair value - $1,000 book value), resulting in a net increase of $22,000 to the book value of the net assets. The adjusted net assets value is $4,550 (total shareholders' equity) + $22,000 (net fair value adjustments) = $26,550. The total purchase consideration is $95,000 (80% interest) + $20,000 (noncontrolling interest) = $115,000. Goodwill is calculated as the purchase consideration minus the fair value of net assets acquired: $115,000 - $26,550 = $88,450.

Use the Following Information to Answer Bellow Questions Polypipe Company

Use the Following Information to Answer Bellow Questions
Polypipe Company