9. Busquets Plc. acquired 100% of Neymar Ltd. in 2022. The table below reports the book value and the fairvalue of the assets and liabilities of Neymar Ltd. at the time of the acquisition:Amounts in £CashAccounts receivablePPELiabilitiesBook valueANSWER: D20010050050Fair value20018075070Busquets Plc. paid £2,000 in cash for Neymar and there were no costs associated with the acquisition.As a result of the acquisition, the total assets of Busquets Plc.a. Increase by £2,000b. Decrease by £2,000c. Do not changed.Increase by £70e. None of the above

Analysis of the given case:Let us break-down the transactions & consider their effect on the…

9. Busquets Plc. acquired 100% of Neymar Ltd. in 2022. The table below reports the book value and the fair value of the assets and liabilities of Neymar Ltd. at the time of the acquisition: Amounts in £ Cash Accounts receivable PPE Liabilities a. Increase by £2,000 b. Decrease by £2,000 Book value c. Do not change d. Increase by £70 e. None of the above 200 100 500 50 Fair value Busquets Plc. paid £2,000 in cash for Neymar and there were no costs associated with the acquisition. As a result of the acquisition, the total assets of Busquets Plc. 200 180 750 70

9. Busquets Plc. acquired 100% of Neymar Ltd. in 2022. The table below reports the book value and the fair value of the assets and liabilities of Neymar Ltd. at the time of the acquisition: Amounts in £ Cash Accounts receivable PPE Liabilities a. Increase by £2,000 b. Decrease by £2,000 Book value c. Do not change d. Increase by £70 e. None of the above 200 100 500 50 Fair value Busquets Plc. paid £2,000 in cash for Neymar and there were no costs associated with the acquisition. As a result of the acquisition, the total assets of Busquets Plc. 200 180 750 70

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 March 31, 2024, Wolfson Corporation acquired all of the outstanding common stock of Barney Corporation for $18,500,000 in cash. The book values and fair values of Barney’s assets and liabilities were as follows: Book Value Fair Value Current assets $ 7,500,000 $ 9,000,000 Property, plant, and equipment 12,500,000 15,500,000 Other assets 1,150,000 1,650,000 Current liabilities 5,500,000 5,500,000 Long-term liabilities 7,500,000 7,000,000 Required: Calculate the amount paid for goodwill.
Shohei Ltd owns 100% of Ohtani Ltd acquired on 1 July 2018 for $3 Million when the shareholders funds of Ohtani Ltd were: Share Capital 1,250,000 Retained Earnings 1,200,000 2,450,000 All assets of Ohtani Ltd were stated at fair value on the date of acquisition. (a) the directors believe that there has been an impairment loss on goodwill of $100,000 for the year ended 30 June 2021 (b) During the 2020-21 financial year Shohei Ltd sells inventory to Ohtani Ltd at a sales price of $800,000. The inventory cost Shohei Ltd $400,000 to produce. At 30 June 2021, 30% of the inventory is still on hand with Ohtani Ltd. The tax rate is 30% Record the consolidation entries for 30 June 2021
On 1 July 2014 Padma Ltd acquires 25 per cent of the issued capital of Jamuna Ltd for a cash consideration of $360000.At the date of acquisition, the shareholders’ equity of Jamuna Ltd is: Share capital $450000 Retained earnings $300000 Total shareholders’ equity $750000 Additional information On the date of acquisition, buildings have a carrying amount in the accounts of Jamuna Ltd of $240000 and a market value of $300000. The buildings have an estimated useful life of 10 years after 1 July 2014. For the year ending 30 June 2015 Jamuna Ltd records an after-tax profit of $90000, from which it pays a dividend of $30000. For the year ending 30 June 2016 Jamuna Ltd records an after-tax profit of $300000, from which it pays a dividend of$150000. Assume a tax rate of 30% is assumed Required Apply equity method of accounting to: (a)Calculate the amount of goodwill at the date of acquisition of Jamuna Ltd (b)Prepare the journal entries for the year…
ABC Ltd in Queensland acquired XYZ Ltd in Victoria. Specifically, on 1 July 2022, ABC Ltd acquired all the issued shares of XYZ Ltd for $180 000. The financial statements of XYZ Ltd showed the equity of XYZ Ltd at that date to be: Share capital $100000 General reserve $50000 Retained earnings $30000 All the assets and liabilities of XYZ Ltd were recorded at amounts equal to their fair values at that date. During the year ending 30 June 2023, XYZ Ltd undertook the following action. On 1 January 2023, transferred $10 000 from retained earnings existing at 1 July 2022 to the general reserve. Required Prepare the pre-acquisition entries at 1 July 2022. Prepare the pre-acquisition entries at 30 June 2023.
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Adams, Inc., acquires Clay Corporation on January 1, 2020, in exchange for $713,300 cash. Immediately after the acquisition, the two companies have the following account balances. Clay’s equipment (with a five-year remaining life) is actually worth $641,000. Credit balances are indicated by parentheses. Adams Clay Current assets $ 382,000 $ 272,000 Investment in Clay 713,300 0 Equipment 837,000 584,000 Liabilities (202,000 ) (224,000 ) Common stock (350,000 ) (150,000 ) Retained earnings, 1/1/20 (1,380,300 ) (482,000 ) In 2020, Clay earns a net income of $74,100 and declares and pays a $5,000 cash dividend. In 2020, Adams reports net income from its own operations (exclusive of any income from Clay) of $160,000 and declares no dividends. At the end of 2021, selected account balances for the two companies are as follows: Adams Clay Revenues $ (544,000 ) $ (286,000 ) Expenses 394,400 214,500 Investment…
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On September 1, 2017, Winans Corporation acquired Aumont Enterprises for a cash payment of $700,000, At the time of purchase, Aumont's Balance sheet showed assets of $620,000 Liabilities of $200.000 and owners equity of $420,000, The fair value of Aumonts assets is estimated to be $800 000. Compute the amount of good will acquired by Winans. O S80 000 O $100.000 O $180 000 O All of the above
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