Part A Finch Company acquired all the outstanding common stock of Dove Company for $68,000...
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Accounting
Part A
Finch Company acquired all the outstanding common stock of Dove Company for $68,000 in cash. The book values and fair values of Doves assets and liabilities were as follows:
Book Value
Fair Value
Current assets
$ 24,000
$ 30,000
Property, plant, and equipment
44,000
56,000
Other assets
4,000
6,000
Current liabilities
16,000
16,000
Long-term liabilities
24,000
22,000
Calculate the amount paid for goodwill.
Prepare the journal entry to record Finch Companys acquisition of Dove Company.
Part B
Seagull Company purchases a delivery van for $23,500. Seagull estimates a four-year service life and a residual value of $2,500. During the four-year period, the company expects to drive the van 105,000 miles. Actual miles driven each year were 26,000 miles in Year 1, 28,000 miles in Year 2, 24,000 miles in Year 3, and 27,000 miles in Year 4.
Calculate annual depreciation for the four-year life of the van using each of the following methods:
Straight-line
Double-declining-balance (For the fourth year, set depreciation to be equal to the amount needed to reduce the remaining book value to the residual value.)
Activity-based
Answer & Explanation
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