Judicature Company

Required1
Acquisition cost 7,500,000
Net assets acquired -4,600,000
Goodwill 2,900,000

Required2 Debit Credit

Cash 50,000
Accounts receivable 800,000
Inventory 1,350,000
Property, plant and equipment 4,300,000
Goodwill 2,900,000
Accounts payable 900,000
Note payable-bank 1,000,000
Cash 7,500,000
Keen Company

Required1
Acquisition cost 6,000,000
Net assets acquired at fair value -3,300,000
Goodwill 2,700,000

Total assets at fair value 5,300,000

Total liabilities 2,000,000
Net assets acquired at fair value 2,700,000

Required2 Debit Credit

Cash 50,000
Accounts receivable 500,000
Inventory 1,500,000
Patent 250,000
Property, plant and equipment 3,000,000
Goodwill 2,700,000
Accounts payable 2,000,000
Cash 6,000,000
Larceny Company

Required1
Cash 1,000,000
Inventory 500,000
In-process R and D 5,000,000
Total assets 6,500,000
Total liabilities 3,000,000
Net assets 3,500,000

Acquisition cost 8,000,000

Net assets acquired at fair value -3,500,000
Goodwill 4,500,000

The goodwill includes the fair value of the assembled workforce of P1,200,000. The assembled
workforce is not accounted for separately as an asset.

Required2 Debit Credit

Cash 1,000,000
Inventory 500,000
In process R and D 5,000,000
Goodwill 4,500,000
Accounts payable 2,600,000
Notes payable 400,000
Cash 8,000,000
e assembled
Meek Company

Required
Average earnings or prior years (1,500,000/3) 500,000
Increase in average earnings (10% x 500,000) 50,000
Total 550,000
Less: Patent amortization (500,000/5 years) 100,000
Earnings for goodwill computation 450,000

a. Average future camnings 450,000

Divide by 8%
Net assets including goodwill 5,625,000
Less: Net assets excluding goodwill 5,000,000
Goodwill 625,000

b. Average earnings 450,000

Less: Normal earnings (8% x 5,000,000) 400,000
Average excess earnings 50,000
Divide by 10%
Goodwill 500,000

c. Goodwill (50,000 x 3.17) 158,500

Naughty Company

Required1
Average carnings 250,000
Divide by 10%
Net assets including goodwill 2,500,000
Less: Net assets before goodwill 1,700,000
Goodwill 800,000

Required2
Average earnings 250,000
Less: Normal earnings (8% x 1,700,000) 136,000
Excess earnings 114,000
Divide by 15%
Goodwill 760,000

Required3
Average carnings 250,000
Less: Normal earnings (10% x 1,700,000) 170,000
Excess earnings 80,000
Multiply by, 5
Goodwill 400,000

Required4
Excess earnings 80,000
Multiply by 5.65
Goodwill 452,000
Brisbane Company

Required1
Land 3,500,000
Machinery 2,000,000
Inventory 1,800,000
Accounts receivable 700,000
Trademark 1,000,000
Patent 500,000
Accounts payable -3,000,000
Net assets acquired 6,500,000
Acquisition cost 9,000,000
Goodwill 2,500,000

Required2 Debit Credit

Land 3,500,000
Machinery 2,000,000
Inventory 1,800,000
Accounts receivable 700,000
Trademark 1,000,000
Patent 500,000
Goodwill 2,500,000
Accounts payable 3,000,000
Cash 9,000,000