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AFM491 Lecture Notes - Lecture 3: Intangible Asset, Retained Earnings, Current Liability

64 views6 pages
purplecod222
28 Feb 2018
School
University of Waterloo
Department
Accounting & Financial Management
Course
AFM491
Professor
Robert Ducharme

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Document Summary

Fair value of hanson liabilities (137,500 + 129,800) Common shares (220,000 + 1,650,000 (a) (c) 44,000) The consolidated balance sheet shows the highest debt-to-equity ratio. It also better reflects the solvency risk because it shows the total debt of the economic entity. (d) To eliminate investment account and establish acquisition differential. Note that under ifrs 3, an assembled workforce is not considered an identifiable asset (par. As such, it cannot be recognized apart from goodwill. On this basis, the ,000 value that management believed the assembled workforce to be worth would be recognized as part of goodwill and not as a separate intangible asset. This is supported by the criteria for separate recognition of an intangible asset apart from goodwill as outlined in ifrs 3 requiring that the asset either meet the contractual-legal criterion or the separability criterion. Otherwise, it should be included in the amount recognized as goodwill.

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Related Questions

1. On January 1, Year 1, Pungent Corporation acquired 75% of Summer Corporation's 200,000 outstanding common shares for $2,850,000. On January 1, the book value of Summer's net assets was $3,000,000. Book value equaled fair value for all of Summer's assets and liabilities except land, which had a fair value $200,000 greater than book value, and equipment, which had a fair value $150,000 greater than book value. On January 1, Year 1, Summer had a non-compete agreement with a fair value of $300,000. Compute the amount of goodwill (show your work) to be reported on Pungent Corporation's December 31, Year 1 balance sheet under U.S. GAAP?

2. List the 4 steps in applying the Acquisition method of accounting.

3. In a business combination accounted for as an acquisition, the appraised values of the identifiable assets acquired exceeded the acquisition price. Describe how the excess appraised valued should be reported?

4. Direct costs of a business combination, including finders’ fees and consulting fees, are recognized as expenses in the period incurred. True or False