15.The VV Company will issue shares of P10 par value common stock for all theassets and liabilities of the NN Company. VV Company's common stock has acurrent market value of P40 per share. The NN Company's Statement offinancial position prior to acquisition is shown below:320,000Current AssetsLiabilities400,000PPE (net)880,000Common Stock, P4 par80,000Total Assets1,200,000APIC320,000Retained EarningsTotal Equity400,0001,200,000The fair market value of the current assets is 400,000 while that of the PPEis 1,600,000. All the liabilities are correctly stated VV Company issuedsufficient shares of stock so that the fair market value of the stock isued isequal the fair market value NN Company's net assets.To have an income from acquisition of 100,000, the number of shares to beissued by VV Company should be:C. 42,500A. 37,500B. 37,000D. 42,000

When a Company is acquired by another company, Net assets are taken at fair value.

5.The VV Company will issue shares of P10 par value c assets and liabilities of the NN Company. W Compan current market value of P40 per share. The NN C financial position prior to acquisition is shown below: Current Assets 320,000 Liabilities PPE (net) 880,000 Common Sto Total Assets 1,200,000 APIC Retained Earı

5.The VV Company will issue shares of P10 par value c assets and liabilities of the NN Company. W Compan current market value of P40 per share. The NN C financial position prior to acquisition is shown below: Current Assets 320,000 Liabilities PPE (net) 880,000 Common Sto Total Assets 1,200,000 APIC Retained Earı

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Red owns 80% of White & 40% of Blue. At acquisition White/Blue reserves were £16,000 and £8,000…

A: a) Group Balance Sheet at 31-Dec-21Non-current assets: £58,000 (48,000 + 10,000)Investment in White:…

Q: Power Corporation acquired 70 percent of Silk Corporation’s common stock on December 31, 20x2.…

A: Goodwill is a fixed asset of the company which is created due to customer base, reputation, employee…

Q: on (debit balance) te the gain on acquisition and prepare Phelps' journal entry to record the…

A: Balance sheet refers to the form of financial document of a company that reflects the year end…

Q: 1. On January 3, 2020, Castle Corporation purchased the following equity securities as an…

A: Notes: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the…

Q: Consider the following premerger information about Firm X and Firm Y: Total earnings Shares…

A: In merger assets of the company are combined to form one company and create value for company.

Q: On June 10, 20X8, Tower Corporation acquired 100 percent of Brown Company's common stock. Summarized…

A: Consolidation is an activity in which financial statements of a parent and its subsidiary should be…

Q: Company P acquired 80% of the outstanding common stock of the Company S by issuing common stock with…

A: Cashflow is prepared to track cash inflows and outflows of a company. So basically cashflow is…

Q: P Company paid $5,000,000 (cash) for an 80% interest in S Company on 7/1/07. The book values and…

A: Goodwill is referred to as an intangible asset that is related to the purchase of one company by…

Q: Current Assets P 1,375,000Property, plant and equipment 3,375,000Other non-current assets…

A: Assets are considered a resource that gives benefits to an organization. The assets are shown in the…

Q: (a) Prepare a schedule of changes to the acquisition differential for the four year period ending…

A: Consolidated Net Income : After deducting all costs, taxes, and other charges, a company's…

Q: Estimated purchase consideration and related excess purchase consideration over book value of net…

A: To interpret residual goodwill relative to the total purchase price, we need to calculate the…

Q: Financial statements for Parent and Subsidiary for the year ended December 31, 2x19 follow: INCOME…

A: Consolidated liabilities are the sum of all the liabilities of subsidiary and company which is…

Q: GREY Corp's statement of financial position prior to the acquisition is shown as follows: ASSETS…

A: In business, combination goodwill arises on paying the consideration over the net identifiable value…

Q: TQ2). Maisara Bhd (MB) purchased Jujur Sdn Bhd (JSB) on 1 January 2009. On the date of purchased the…

A: Workings for Consolidated Financial StatementsWorkings for Non-Controlling Interest:NCI = Fair value…

Q: P acquired 90% of S's stock of S on 1/1/x1 for $430,000 when it was selling for $21/share S balance…

A: The objective of the question is to make all journal entries on P's books for 20x1 assuming that P…

Q: On 1 July 2020, Sky Ltd acquired 70% of the share capital (ex. div.) of Jim Ltd for $500,000. At…

A: Part 2: ExplanationIn Step 1, we calculated the NCI share of Jim Ltd's equity on the acquisition…

Q: Compute the amount of investment income (loss) reported by Peace from its investment in Symbol for…

Q: Estimated purchase consideration and related excess purchase consideration over book value of net…

A: Residual goodwill is the difference between the total purchase price and the fair value of net…

Q: ABC Corp acquired 30,000 shares of XYZ Co. The shares were actively traded in the three markets. The…

A: Shares which are actively traded in market is to be recognised as investment at fair value. Fair…

Q: If P. company paid $360000 to acquire a part of S. company common stocks and if the positive…

A: The purchase consideration is the amount paid by the acquiring company to the subsidiary company in…

Q: Q5- On January 3, 20X9, Redding Company acquired 80 percent of Frazer Corporation's common stock for…

A: The total stockholders' equity in the consolidated balance sheet will include the total…

Concept explainers

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

15.The VV Company will issue shares of P10 par value common stock for all the
assets and liabilities of the NN Company. VV Company's common stock has a
current market value of P40 per share. The NN Company's Statement of
financial position prior to acquisition is shown below:
320,000
Current Assets
Liabilities
400,000
PPE (net)
880,000
Common Stock, P4 par
80,000
Total Assets
1,200,000
APIC
320,000
Retained Earnings
Total Equity
400,000
1,200,000
The fair market value of the current assets is 400,000 while that of the PPE
is 1,600,000. All the liabilities are correctly stated VV Company issued
sufficient shares of stock so that the fair market value of the stock isued is
equal the fair market value NN Company's net assets.
To have an income from acquisition of 100,000, the number of shares to be
issued by VV Company should be:
C. 42,500
A. 37,500
B. 37,000
D. 42,000

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Company A Acquires Company B at $9 per share Company B; Trading at $5, 1,000,000 outstanding shares Company A synergies of $6,000,000 from acquisition FInd Max price Company A should Pay for Company B
Dd.91.
nkt.4
IUuwvie t0 Accountancy Company is: a. P393,000 b. P376,500 c. P390,000 d. P406,500 11. YSL Corporation acquired 80% of the outstanding ordinary shares of GBX Company on June 1, 2022 for P586,250. GBX Company's shareholder's equity components at the end of this year were as follows: Ordinary shares, P100 par, P250,000; Share premium, P112,500 and Retained earnings, P222,5000. NCI is measured at fair value. All the assets of GBX were fairly valued, except for inventories, which is overstated by P11,000 and equipment, which is understated by P15,000. Remaining useful life of equipment is 4 years. Both companies use straight line method for depreciation and amortization. Shareholder's equity of YSL on January 1, 2022 is composed of Ordinary shares, P750,000; Share premium, P175,000 and Retained earnings, P525,000. Fair value of NCI on the date of acquisition is P117,500. Goodwill, if any, should be written down by P14,225 at year end. Net income for the first year of parent and subsidiary…
Armadillo Enterprises acquired the following equity investmentsat the beginning of year 1 as trading investments. Description Number of shares Market price per share Total price Finestra Company 15,000 x $25 $387,500 BVD Company 20,000 X$18 $360,000 Market values at theend of Years 1 &2 are presented below: Market/Fair Value End of year 1 End of year 2 Finestra Company $19 $23 BVD Company |$22 $28 REQUIREMENTS: Prepare the journal entry to record the acquisition of theinvestments. Prepare the adjusting journal entry required at the end of year1. Armadillo Enterprises sells 15,000 shares of BVD Company for $16at the beginning of year 2. Prepare the journal entry to record thesale. Prepare the adjusting journal entry required at the end of year2. Assume that ArmadilloEnterprises now holds these investments asavailable-for-sale. Prepare the journal entry to record the acquisition of theinvestments. Prepare the adjusting journal entry required at the end of year1. Armadillo Enterprises…