Salem Co Had the Following Account Balances as of December 1

question 62

Essay

Salem Co. had the following account balances as of December 1, 2020:
Assume that Bellington paid cash of $2.8 million and no stock is issued. Also assume that $50,000 is paid in direct combination costs.Required:For Goodwill, determine what balance would be included in a December 1, 2020 consolidation as a result of the acquisition.

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Definitions:

Cash Received

The total amount of cash that an entity collects during a specific period, from various sources including sales, financing, or investments.

Bonds

Long-term debt securities issued by corporations or governments to raise capital, promising to pay the bearer a specified amount of interest over a set period until repayment of the principal.

Face Amount

The value of a financial instrument as stated on the instrument itself.

Bond Discount

Occurs when a bond is issued for less than its par (or face) value; the difference between the issue price and the par value.