Taste-T Company has been in business for 30 years and has developed a large grou

Question

Taste-T Company has been in business for 30 years and has developed a large group of loyal restaurant customers. Down Home Foods made an offer to buy Taste-T Company for $6,700,000. The market value of Taste-T’s tangible assets, net of liabilities, on the date of the offer is $5,950,000. Taste-T also holds a patent for a fluting machine that the company invented (the patent with a market value of $375,000 was never recorded by Taste-T because it was developed internally).

How much has Down Home Foods included for intangibles in its offer of $6,700,000?

Assuming Taste-T accepts this offer, which company will report Goodwill on its balance sheet and at what amount?

How much has Down Home Foods included for intangibles in its offer of $6,700,000?

Assuming Taste-T accepts this offer, which company will report Goodwill on its balance sheet and at what amount?

Explanation / Answer

Solution-

1 How much has Down Home Foods included for intangibles in its offer of $6,700,000

750,000

2 Assuming Taste-T accepts this offer, which company will report Goodwill on its balance sheet and at what amount

375,000

Detail Amount ($) Sales value        6,700,000 The market value of Taste-T’s tangible assets, net of liabilities        5,950,000 Intangibles value           750,000 Patent for a fluting machine           375,000 Goodwill (Balancing Figure)           375,000

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