Camire Corp. acquired 100% of the common stock of Koontz Technologies, Inc. The purchase price for Koontz was $22,950 million and was allocated as follows:

a. What method of accounting did Camire use to account for this acquisition?
b. What amount(s) will be recorded in the investment account of Camire's balance sheet for the Koontz Technologies acquisition?
c. Are the intangible assets purchased in the Koontz Technologies acquisition, reported on Camire's consolidated balance sheet at book value or at fair value on the date of the acquisition? Explain.
d. How will the intangible assets account balance change on the consolidated balance sheet in subsequent years?
e. How will the recognition of goodwill affect Camire's consolidated balance sheet? How will this asset change in subsequent years?

Question

Camire Corp. acquired 100% of the common stock of Koontz Technologies, Inc. The purchase price for Koontz was $22,950 million and was allocated as follows: 
  
a. What method of accounting did Camire use to account for this acquisition?
b. What amount(s) will be recorded in the investment account of Camire's balance sheet for the Koontz Technologies acquisition?
c. Are the intangible assets purchased in the Koontz Technologies acquisition, reported on Camire's consolidated balance sheet at book value or at fair value on the date of the acquisition? Explain.
d. How will the intangible assets account balance change on the consolidated balance sheet in subsequent years?
e. How will the recognition of goodwill affect Camire's consolidated balance sheet? How will this asset change in subsequent years?

Quizplus · Accepted Answer

The Answer of Camire Corp. acquired 100% of the common stock of Koontz Technologies, Inc. The purchase price for Koontz was $22,950 million and was allocated as follows: 
  
a. What method of accounting did Camire use to account for this acquisition?
b. What amount(s) will be recorded in the investment account of Camire's balance sheet for the Koontz Technologies acquisition?
c. Are the intangible assets purchased in the Koontz Technologies acquisition, reported on Camire's consolidated balance sheet at book value or at fair value on the date of the acquisition? Explain.
d. How will the intangible assets account balance change on the consolidated balance sheet in subsequent years?
e. How will the recognition of goodwill affect Camire's consolidated balance sheet? How will this asset change in subsequent years?