Lisa Corporation made an offer to acquire the assets and assume the liabilities of Toga Corporation. Toga’s balance sheet as of December 31, 2012, appears below. Toga has no unrecorded liabilities or...

Lisa Corporation made an offer to acquire the assets and assume the liabilities of Toga Corporation. Toga’s balance sheet as of December 31, 2012, appears below. Toga has no unrecorded liabilities or contingent liabilities. The market values of Toga’s current liabilities approximate their book values. Lisa Corporation offered Toga Corporation’s Board of Directors $780,000,000 cash for 100 percent ownership interest. TOGA CORPORATION Balance Sheet {in thousands) December 31, 2012 Assets Accounts receivable ……………………………………………………… $ 40000 Inventories …………………………………………………………………. 90000 Long-term marketable debt securities. …………………………………….. 95000Property, plant and equipment …………………………………………… 275000 Total assets ……………………………………………………………… $500000 Liabilities and Shareholders’ Equity Current liabilities ……………………………………………………….. $ 70000 Capital stock …………………………………………………………….. 230000 Retained earnings ……………………………………………………….. 200000 Total liabilities and shareholders’ equity ……………………………… $ 500000 The fair values of Toga’s assets as of December 31, 2012, are estimated to be as follows: (in thousands)Fair Value Accounts receivable …………………………………………………. $ 40,000 Inventories …………………………………………………………… 135,000 Long-term marketable debt securities ……………………………….. 115,000 Property, plant and equipment ………………………………………. 410,000 Total fair market value ……………………………………………… $700,000 Required a. Identify five business factors or conditions that generally give rise to goodwill. b. Determine the amount of goodwill that would be recorded on the books of Lisa Corporation if the $780,000,000 cash offer is accepted by Toga Corporation. c. Explain why the goodwill determined in part b was not included on Toga Corporation’s balance sheet. View Solution:

Lisa Corporation made an offer to acquire the assets and