Data related to the acquisition of timber rights and intangible assets during the current year ended December 31 are as follows

PR 10-6A Data related to the acquisition of timber rights and intangible assets during the current year ended December 31 are as follows:

a. On December 31, the company determined that $20,000,000 of goodwill was impaired.
b. Governmental and legal costs of $675,000 were incurred on June 30 in obtaining a patent with an estimated economic life of 10 years. Amortization is to be for one-half year.
c. Timber rights on a tract of land were purchased for $1,665,000 on February 16. The stand of timber is estimated at 9,000,000 board feet. During the current year, 2,400,000 board feet of timber were cut and sold.

Instructions
1. Determine the amount of the amortization, depletion, or impairment for the current year for each of the foregoing items.
2. Journalize the adjusting entries to record the amortization, depletion, or impairment for each item.

Click here for the solution: Data related to the acquisition of timber rights and intangible assets during the current year ended December 31 are as follows

Dickinson Corporation is considering the acquisition of Williston Company through the acquisition of Williston’s common stock

Dickinson Corporation is considering the acquisition of Williston Company through the acquisition of Williston’s common stock. Dickinson Corporation will issue 15,000 shares of its $5 par common stock, with a fair value of $30 per share, in exchange for all 10,000 outstanding shares of Williston Company’s voting common stock. The acquisition meets the criteria for a tax-free exchange as to the seller. Because of this, Dickinson Corporation will be limited for future tax returns to the book value of the depreciable assets. Dickinson Corporation falls into the 30% tax bracket. The appraisal of the assets of Williston Company shows that the inventory has a fair value of $120,000, and the depreciable fixed assets have a fair value of $250,000 and a 10-year life. Any remaining excess is attributed to goodwill. Williston Company has the following balance sheet just before the acquisition: Assets Cash $ 40,000 Accts Rec 150,000 Inventory 100,000 Depreciable Assets 210,000 $500,000 Liabilities & Equities Current Liabilities $ 50,000 Bonds Payable 100,000 C Stk ($10 par) 100,000 Retained Earnings 250,000 $500,000

Required: Prepare the elimination entries that would be made on the consolidated worksheet on the date of acquisition.


Click here for the solution: Dickinson Corporation is considering the acquisition of Williston Company through the acquisition of Williston’s common stock

Herky Foods is considering acquisition of a new wrapping machine

Herky Foods is considering acquisition of a new wrapping machine. The initial investment is estimated at $1.25 million, and the machine will have a 5-year life with no salvage value. Using a 6% discount rate, determine the net present value (NPV) of the machine given its expected operating cash inflows shown in the following table. Based on the project's NPV, should Herky make this investment?

Year Cash Inflow
1 $400,000
2 375,000
3 3000,000
4 350,000
5 200,000

Click here for the solution: Herky Foods is considering acquisition of a new wrapping machine

Case 9-42: Comprehensive Master Budget, Borrowing, Acquisition of Automated Material-Handling System

Case 9-42: Comprehensive Master Budget, Borrowing, Acquisition of Automated Material-Handling System

We really need to get this new material-handling equipment in operation just after the New Year begins. I hope we can finance it largely with cash and marketable securities, but if necessary we can get a short-term loan down at MetroBank.” This statement by Beth Davies-Lowry, president of Global Electronics Company, concluded a meeting she had called with the firm’s top management.

AND SO ON

Check Figures:
1. Sales in Account, First Quarter: $2,184,600
3. Purchases, First Quarter: $2,103,640
5. Cash Receipts, First Quarter: $2,734,060
7. Net Income: $321,312

Click here for the solution: Case 9-42: Comprehensive Master Budget, Borrowing, Acquisition of Automated Material-Handling System