5. The general ledger of Vance Corporation as of December 31, 2011, includes the

Question

5. The general ledger of Vance Corporation as of December 31, 2011, includes the following accounts:

Copyrights $ 30,000
Deposits with advertising agency (will be used to promote goodwill) 27,000
Discount on bonds payable 70,000
Excess of cost over fair value of identifiable net assets of
Acquired subsidiary 390,000
Trademarks 90,000

In the preparation of Vance's balance sheet as of December 31, 2011, what should be reported as total intangible assets?
a. $480,000.
b. $507,000.
c. $510,000.
d. $537,000.

6. Blue Sky Company’s 12/31/10 balance sheet reports assets of $5,000,000 and liabilities
of $2,000,000. All of Blue Sky’s assets’ book values approximate their fair value, except
for land, which has a fair value that is $300,000 greater than its book value. On
12/31/10, Horace Wimp Corporation paid $5,100,000 to acquire Blue Sky. What amount
of goodwill should Horace Wimp record as a result of this purchase?
a. $ -0-
b. $100,000
c. $1,800,000
d. $2,100,000

7. Twilight Corporation acquired End-of-the-World Products on January 1, 2010 for
$4,000,000, and recorded goodwill of $750,000 as a result of that purchase. At
December 31, 2010, the End-of-the-World Products Division had a fair value of
$3,400,000. The net identifiable assets of the Division (excluding goodwill) had a fair
value of $2,900,000 at that time. What amount of loss on impairment of goodwill should
Twilight record in 2010?
a. $ -0-
b. $250,000
c. $350,000
d. $600,000

8. Which of the following sets of conditions would give rise to the accrual of a contingency
under current generally accepted accounting principles?
a. Amount of loss is reasonably estimable and event occurs infrequently.
b. Amount of loss is reasonably estimable and occurrence of event is probable.
c. Event is unusual in nature and occurrence of event is probable.
d. Event is unusual in nature and event occurs infrequently.

Explanation / Answer

5 c. $510,000.

   Intangible assets are which can not be touched , feel

   copy right =30000

Trademarks =90,000

Excess of cost over fair value of identifiable net assets of
Acquired subsidiary =390,000

   $510000

Deposits with advertising agency (will be used to promote goodwill) 27,000 is like a current assets
Discount on bonds payable 70,000 is a expense not assets.

6.   c. $1,800,000

  Assets 5000000

Add: Fair value of land 300000

Total assets 5300000

less: liabilities    2000000

Net assets 3300000

less: purchase consideration 5100000

Goodwill   1800000

8. b. Amount of loss is reasonably estimable and occurrence of event is probable.

Amount of future loss is reasonably estimated with more than the 50% probability chances of its occurance

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