2. M acquires H Company on 01/01/15. To obtain the net assets, M pays $200.000 in cashand issues 10.000 shares of its own $10 par value common stock. On this date, M's stockhas a fair market value of $18 per share. The book values for both M and H as of31/12/14, follow. The fair market value of each of H's accounts is also included. Inaddition H holds fully amortized patent that still retains a $30.000 value.H CompanyM IncFair MarketBook ValueBook ValueValueCash$ 300.000$ 40.000$ 40.000Receivables160.000220.000100.00090.00080.000Inventory130.000130.000Land60.00060.000Buildings (net)Equipment (net)Accounts PayableLong-Term Liabilities400.000110.000140.000120.00050.00050.000160.00030.00030.000380.000170.000150.000Common Stock400.00040.000Retained Earnings360.000240.000Required:Assume that this combination is a statutory merger so that H's accountstransferred to the records of M with H subsequently being dissolvedcorporation. Prepare the journal entries for M that are required to record this merger.aretobeasalegal

What is meant by a Merger? When two or more companies unite to expand their business together as one…

2. M acquires H Company on 01/01/15. To obtain the net assets, M pays $200.000 in cash and issues 10.000 shares of its own $10 par value common stock. On this date, M's stock has a fair market value of $18 per share. The book values for both M and H as 31/12/14, follow. The fair market value of each of H's accounts is also included. In addition H holds fully amortized patent that still retains a $30.000 value. of H Company M Inc Fair Market Book Value $ 300.000 Book Value Value Cash $ 40.000 $ 40.000 Receivables 160.000 220.000 90.000 130.000 80.000 130.000 Inventory Land 100.000 400.000 60.000 60.000 Buildings (net) Equipment (net) Accounts Payable Long-Term Liabilities Common Stock 110.000 140.000 120.000 50.000 50.000 160.000 30.000 30.000 380.000 170.000 150.000 400.000 40.000 Retained Earnings 360.000 240.000

2. M acquires H Company on 01/01/15. To obtain the net assets, M pays $200.000 in cash and issues 10.000 shares of its own $10 par value common stock. On this date, M's stock has a fair market value of $18 per share. The book values for both M and H as 31/12/14, follow. The fair market value of each of H's accounts is also included. In addition H holds fully amortized patent that still retains a $30.000 value. of H Company M Inc Fair Market Book Value $ 300.000 Book Value Value Cash $ 40.000 $ 40.000 Receivables 160.000 220.000 90.000 130.000 80.000 130.000 Inventory Land 100.000 400.000 60.000 60.000 Buildings (net) Equipment (net) Accounts Payable Long-Term Liabilities Common Stock 110.000 140.000 120.000 50.000 50.000 160.000 30.000 30.000 380.000 170.000 150.000 400.000 40.000 Retained Earnings 360.000 240.000

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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On January 2, year 1, an entity purchased a 30% interest in Tod Co. for 250,000. On this date, Tod’s stockholders’ equity was 500,000. The carrying amounts of Tod’s identifiable net assets approximated their fair values, except for land whose fair value exceeded its carrying amount by 200,000. Tod reported net income of 100,000 for year 1, and paid no dividends. The entity accounts for this investment using the equity method. In its December 31, year 1 balance sheet, what amount should the entity report as investment in subsidiary?
Kk.280. Robert owns 60 of 100 shares Ying Corporation’s stock and 80 of 100 shares of Yang Corp.stock. Robert’s basis in his Ying shares is $24,000 and his basis in his Yang shares is$16,000. Robert sells 30 of his Ying shares to Yang Corporation for $80,000. At the end of theyear of the sale, Ying and Yang have E&P of $35,000 and $60,000 respectively. a. How will the sale of the stock be treated for tax purposes? sale or dividend? Why?b. What is Robert’s basis in his shares of Ying and Yang after the sale? c. How does the sale effect the E&P of Ying and Yang Corporation? d. How would the result differ if he sold 55 of his Ying shares to Yang Corporation? Why?
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Spartan Corporation redeemed 25 percent of its shares for $1,800 on July 1 of this year, in a transaction that qualified as an exchange under IRC §302(a). Spartan’s accumulated E&P at the beginning of the year was $1,800. Its current E&P is $16,300. Spartan made dividend distributions of $2,700 on June 1 and $6,000 on August 31. Determine the beginning balance in Spartan’s accumulated E&P at the beginning of the next year. See Revenue Rules 74-338 and 74-339 for help in making this calculation. (Round your intermediate calculations to the nearest whole dollar amount.)
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On January 2, 2020, Hanz Corporation bought 30% of the outstanding ordinary shares of Eve Corporation for P1,560,000 cash. Hanz accounts for this investment by the equity method. At the date of acquisition of the stock, Eve's net assets had a book and fair value of P5,200,000. Eve's net income for the year ended December 31, 2020 was P1,400,000. During 2020, Eve declared and paid cash dividends of P200,000. On December 31, 2020, how much should Hanz carry its investment in Eve?
V Corp. had 1,000 shares of stock outstanding. The shares are owned by the following individuals: Anne owns 400 shares; basis of $100 per share Mother (Anne’s mother) owns 200 shares Brother (Anne’s brother) owns 400 shares V redeem 300 shares owned by Anne in exchange for land (FMV = $36,000; V Corp.’s basis = $10,000) in a qualifying redemption. What is V Corp.’s gain or loss recognized on the distribution of the land as part of a qualifying redemption? Enter gain as a positive number or loss as a negative number.
Belize Biltmore Plaza acquires a patent from Camino Real in exchange for 3,000 shares of Belize Biltmore Plaza’s $6 par value common stock and $85,000 cash. When the patent was initially issued to Camino Real, Belize Biltmore Plaza’s stock was selling at $8.25 per share. When Belize Biltmore Plaza acquired the patent, its stock was selling for $9.50 per share. Belize Biltmore should record the patent at what amount?
Magenta Corporation has 1,000 shares of stock outstanding. Julie owns 400 of these shares, and unrelated individuals own the remaining 600 shares. Magenta redeems 100 of Julie's shares for $200,000. In the year of the redemption, Magenta has $230,000 of paid-in capital and $330,000 of E&P. Requirements a. How does the redemption affect Magenta's E&P balance if the redemption qualifies for sale treatment? b. How does the redemption affect Magenta's E&P balance if the redemption does not qualify for sale treatment? Requirements a and b. How does the redemption affect Magenta's E&P balance if the redemption qualifies for sale treatment and if the redemption does not qualify for sale treatement? (If an input field is not used, leave the input field empty. Do not select a label or enter a zero.) Remaining Redemption qualifies for sale treatment Redemption does not qualify for sale treatment Effect on E&P By this amount amount (if Treatment of remaining applicable) amount
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D1. Account