Use the following information for questions 1 to 4:On December 31, 2014, Add-On Company acquired 100 percent of Venus Corporation's common stockfor P300,000. Balance sheet information Venus just prior to the acquisition is given here:Cash and receivables.P 35,000Inventory..Land..75,000100,000Buildings and equipment (net)..220.000Total assets.420,000Liabilities and Stockholder's EquityAccounts payable.Bonds payable.Common stock (P1 par).P 65,000150,000100,000Retained earnings..115,000Total liabilities and equity..430,000At the date of the business combination. Venus's net assets and liabilities approximated fair valueexcept for inventory, which had a fair value of P60,000, land which had a fair value of P125,000, andbuildings and equipment (net), which had a fair value of P250,000.1. What amount of inventory will be included in the consolidated balance sheet immediately followingthe acquisition?а. Р15,000C.P60,000b. P45,0002. What amount of goodwill will be included in the consolidated balance sheet immediately followingthe acquisition?d.P75,000a. P15,000b. Р30,0003. What amount of differential will be reflected in a consolidation work paper to prepare ac.P45,000d.P85,000consolidated balance sheet immediately after the business combination?a. P 0b. P15,0004. What amount will be included as investment in Venus Corporation in the consolidated balance sheetc. P45,000P85,000d.immediately following the acquisition?а. Р 0b. P255,000P300,000P395,000C.d.

Inventory management is the process of obtaining and storing raw materials or materials in the…

1. What amount of inventory will be included in the consolidated balance sheet immediately following the acquisition? a. P15,000 b. P45,000 2. What amount of goodwill will be included in the consolidated balance sheet immediately following the acquisition? c. P60,000 d. P75,000 c. d. P45,000 P85,000 a. P15,000 b. Р30,000 3. What amount of differential will be reflected in a consolidation work paper to prepare a consolidated balance sheet immediately after the business combination? a. P 0 b. P15,000 4. What amount will be included as investment in Venus Corporation in the consolidated balance sheet immediately following the acquisition? a. P 0 c. P45,000 d. P85,000 C. P300,000 P255 000 P395 000

1. What amount of inventory will be included in the consolidated balance sheet immediately following the acquisition? a. P15,000 b. P45,000 2. What amount of goodwill will be included in the consolidated balance sheet immediately following the acquisition? c. P60,000 d. P75,000 c. d. P45,000 P85,000 a. P15,000 b. Р30,000 3. What amount of differential will be reflected in a consolidation work paper to prepare a consolidated balance sheet immediately after the business combination? a. P 0 b. P15,000 4. What amount will be included as investment in Venus Corporation in the consolidated balance sheet immediately following the acquisition? a. P 0 c. P45,000 d. P85,000 C. P300,000 P255 000 P395 000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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What is a good response to? The unrealized intercompany profits can assuredly have an impact on the consolidated financial statements, as true profits and losses will not be recognized until inventory is sold to an unrelated entity. Prior to this third-party sale the intercompany profit or loss in unrealized and must be removed from the reports consolidation to avoid overstating the consolidated net income (Hoyle, Schaefer, & Doupnik, 2024). It is also important to determine if the inventory sale was upstream or downstream, as the considerations will vary based on the sale in relation to the parent company. For an upstream sale (subsidiary to parent company) any unrealized profit or loss can be partially allocated to non-controlling interests assuming such entities exist, and once the inventory has been resold the recognized revenue is subsequently split accordingly. During a downstream sale (parent to subsidiary company) the unrealized revenue is allocated to the parent company,…
Statement 1: Consolidated inventory on the statement of financial position is recorded at fair market value to the affiliated group. Statement 2: If the intercompany seller is the subsidiary, it is the subsidiary's income that needs adjustment. Which statement/s is TRUE?
The acquisitions method for consolidation requires that all assets and liabilities of the subsidiary are reported using 100% of cost values at the combination date. Select one: True False
What is the Goodwill (Gain on Bargain Purchase) ?
Which of the following items shall be cancelled on consolidation? a. Receivables related to intra-group sales b. Payables related to intra-group purchases c. Unrealised profit on intra-group transactions d. Loans related to intra-group lending e. All of the above
16.Explain the process of accounting for mergers and acquisitions. How are the assets and liabilities of the acquired company recorded on the balance sheet of the acquiring company? Discuss the treatment of goodwill and any adjustments that might be necessary post-acquisition. Provide an example of a hypothetical merger and the journal entries that would be recorded.
Explain why consolidated entities defer intra-entity gross profit in ending inventory and the consolidation procedures required subsequently to recognize profits.
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a. Determine the goodwill or gain on bargain purchase from the above acquisition if the NCI is to be valued on a proportionate b. Determine the balance of the NCI in FC’s consolidated financial statements.
If a seller makes an intra-entity sale of a depreciable asset at a price above book value, the seller’s beginning Retained Earnings is reduced when preparing each subsequent consolidation. Why does the amount of the adjustment change from year to year?