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Test. A ×/ @ Take a Test-parthrv patel × a search Textbook Solutio ×?CallofDuty Tentch c a Secure 1 https/www.mathol.com/Student Payr Tes Test.aspx?tc-profile-ur?https% blackboard com%2flearr %2fap %2t 1962fit?%2fprofile&app; product de 218 s person ::: Apps str email Twitch-Savannah Tech-B. N Netflix D. Savannah Technical y Twitter @ Login O YouTube ? WEATHER CHANNE rcedid 900 ACCT 1105 CRN 60354 (1) Test: Chapter 10 Post-Test This Question: 1 pt 6 of 6 (5 complete) Plgrim has acquired several other companies. Assume that Pilgrim purchased Kit for $6.000,000 cash. The book value of kifs assets is $15.000,000 (market value $16,000,00), and it has liabilities of $15,000,000 (market value $15,000.000) 1. 2. Compute the cost of goodwill purchased by Pilgrim Record the purchase of Kit by Pilgrim Requirement 1. Compute the cost of goodwill purchased by Pilgrim Purchase price to acquire Kt Market value of Kit\'s assets Less: Market value of Kif\'s iabilities Less Market value of Kits net assets Goodwill Requirement 2. Record the purchase of Kit by Pilgrim, Inc. (Record debits first then credits Select the explanation on the last line of the journal entry table) Debit Credit Date Accounts and Explanation Choose from any list or enter any number in the input fields and then continue to the next question

Solution

1)

Purchase price to acquire kit = $6000000

Market value of kit\'s assets. = $16000000

- market value of kit\'s liability = $15000000

- Market value of kit\'s net assets = $1000000

Goodwill . = . $5000000

2)

Journal entry:

Assets a/c . Dr. $16000000   

Goodwill a/c . Dr. $5000000

To. Liabilities a/c. Cr. $15000000

To . Cash. a/c. Cr. $6000000

(Being assets, liablility and goodwill takenover by pilgrim)