PROBLEM 1: Goodwill and Barain Purchase Option

Requirement 1
Accounts Receivable 180,000
Inventory 400,000
Land 50,000
Building 60,000
Equipment 70,000
Patent 20,000
Goodwill 10,000
Current Liabilities 70,000
Long-term debt 160,000
Cash 560,000

Acquisition Expense 20,000

Cash 20,000

Requirement 2
Accounts Receivable 180,000
Inventory 400,000
Land 50,000
Building 60,000
Equipment 70,000
Patent 20,000
Current Liabilities 70,000
Long-term debt 160,000
Cash 500,000
Gain on Bargain Purchase 50,000

Acquisition Expense 20,000

Cash 20,000

PROBLEM 2: Cash and Stock plus Contingent Consideration

Requirement 1

Goodwill 500,000
Paid-in capital for Contingent Consideration 500,000

Requirement 2

Paid-in capital for Contingent Consideration 500,000

Common Stock 100,000 (10,000 shares X 10par value)
Paid-in capital in excess of par 400,000
Problem 3: Acquisition with Balance Sheet

NT Company
Statement of Financial Position
As of January 1, 20x4

Assets Liabilities and Shareholder's Equity

Cash 64,000 Accounts Payable 144,000
Receivables 213,000 Notes Payable 415,000
Trademarks 625,000 Total Liabilities 559,000
Record Music Catalog 1,020,000
Equipment 425,000 Common Stock 460,000
In-process research and developm 200,000 Additional paid in capital 695,000
Goodwill 27,000 Retained Earnings 860,000
Total Equities 2,015,000

Total Assets 2,574,000 Total Liabilities and Shareholder's E 2,574,000

Cash
NT Beginning cash 60,000 Goodwill
Acquired from OTG 29,000 Cash 29,000
Stock Registration and issuance co (25,000) Receivables 63,000
NT Cash after acquisition 64,000 Trademarks 225,000
Record Music Catalog 180,000
Receivables Equipment 105,000
NT Recceivables 150,000 In-process research and developme 200,000
Acquired from OTG 63,000 Accounts Payable (34,000)
NT Receivables after Acquisition 213,000 Notes Payable (45,000)
Net identifiable assets 723,000
Trademarks Consideration transferred 750,000
NT Trademarks 400,000 Goodwill 27,000
Acquired from OTG 225,000
NT Trademarks after Acquisition 625,000 Accounts Payable
NT Accounts Payable 110,000
Record Music Catalog Acquired from OTG 34,000
NT Record Music Catalog 840,000 NT Accounts Payable from Acquisiti 144,000
Acquired from OTG 180,000
NT Trademarks after Acquisition 1,020,000 Notes Payable
NT Notes Payable 370,000
Equipment Acquired from OTG 45,000
NT Equipments 320,000 NT Notes Payable from Acquisition 415,000
Acquired from OTG 105,000
NT Equipments after acquisition 425,000 Common Stock
Beginning 400,000
Common Stock exchanged 60,000*
Total 460,000
*(15,000 shares X par value of 4=60,000)

Share Premium
Paid in capital of NT 30,000
Paid in capital from the merger 690,000
Stock issue cost (25,000)
695,000