On January 1, 2020, Red Company purchased80% of the common stock of Al-Yasa Companyby issuing 10,000 shares of its (AI-Maha) OMR15par value common stock with a market price ofOMR25 per share. Al-Naba incurred cashexpenses of OMR 8,000 for registering andissuing the common stock. The stockholders'equity sections of the two companies' balancesheets on December 31, 2019, were:Al-YasaAl-MahaCommon Stock, OMR15 par valueOMR 350,000OMR240,000Other Contributed Capital590,00080,000Retained Earnings380,000130,000Required:A. Prepare the journal entry(s) on the books of Al-Maha Company to record the purchase of thecommon stock of Moon Company and relatedexpenses.B. Prepare the elimination entry(s) required forthe preparation of a consolidated balance sheetwork paper on the date of acquisition.

a). Journal Entries Date Particulars Debit Credit Jan 01.2015 Investment in AI-Yasa company…

A. Prepare the journal entry(s) on the books of Al- Maha Company to record the purchase of the common stock of Moon Company and related expenses. B. Prepare the elimination entry(s) required for the preparation of a consolidated balance sheet work paper on the date of acquisition.

A. Prepare the journal entry(s) on the books of Al- Maha Company to record the purchase of the common stock of Moon Company and related expenses. B. Prepare the elimination entry(s) required for the preparation of a consolidated balance sheet work paper on the date of acquisition.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

User Which of the following is true about the Determination and Distribution Schedule? a/ It measures the excess of the fair value of the subsidiary over the fair value of net identifiable assets b/ It determines the value of goodwill or gain on acquisition that should be recorded by the parent c/ All of these are true. d/ It is prepared once only on the date of acquisition and used to prepare the consolidation entries in the following periods
A business combination resulting to a goodwill is accounted using acquisition method. In the consolidated balance sheet at the date of acquisition, which of the following statement about retained earnings (RE) is TRUE? A. RE is equal to RE of the acquirer plus unadjusted net income of the acquiree. B. RE is equal to RE of the acquirer only. C. RE is equal to the sum of the RE of the acquirer and acquiree. D. RE is equal to RE of the acquirer plus adjusted income of subsidiary net of minority interest in subsidiary’s net income.
24
During a fiscal year, the balance of a parent company's Investment in Subsidiary ledger account for a wholly owned subsidiary, for which the parent company uses the equity method of accounting, increases the amount of the sibsidiary's A. Adjusted net income. B. Dividends. C. Adjusted net income plus dividends. D. Undistributed earnings.
Question 1 Explain the purpose of the pre-acquisition entries in the preparation of consolidated financial statements. Question 2 When there is a dividend payable by the subsidiary at acquisition date, under what conditions should the existence of this dividend be taken into consideration in preparing the pre-acquisition entries? Question 3: Prepare acquisition analysis and Consolidation worksheet entries Syd Ltd acquired all the issued shares (Cum-div.) of Mel Ltd on 1 July 2020. At this date the financial position of Matt Ltd was as follows: Carrying Fair Value Amount $300 000 (60 000) 25 200 Plant 270 000 Accumulated Depreciation Account Receivables 25 200 Cash 15 000 15 000 15 600 295 800 Inventories 19 600 Share Capital 220 000 General Reserve 23 400 Retained Earnings 24 200 Provisions of Employee benefits Dividend Payable 19 200 19 200 9 000 295 800 9 000 Additional information: The assets of Mel Ltd did not include a patent that was valued by Syd Ltd at $12 000. Its useful life…
Which of the following is not an application of the acquisition method? a. Measuring the non-controlling interest at the non-controlling interest’s proportionate share in the acquiree’s net identifiable assets or fair value, whichever is higher. b. Measuring the consideration transferred at fair value. c. Identifying the acquirer which is the entity that obtains control over another business in a business combination. d. Determining the acquisition date which is the date the acquirer obtains control over acquiree.
In reference to the downstream or upstream sale of depreciable assets, which of the following statements is correct? A. Gains and losses appear in the parent-company accounts in the year of sale and must be eliminated by the parent company determining its investment income under equity method of accounting. B. The initial effect of unrealized gains and losses from downstream sales of depreciable asset is different from the sale of non-depreciable assets. C. Gains, but not losses, appear in the parent-company accounts in the year of sale and must be eliminated by the parent company in determining its investment income under the equity method of accounting. D. Upstream sales from the subsidiary to the parent company always result in unrealized gains or losses.
Assume that both the Parent and Subsidiary adopt 31 December as their financial year-end. Further assume that the transactions were conducted on cash basis. (i) Prepare all the relevant journal entries in the separate financial statements of the respective companies. (ii) Prepare all the relevant consolidation journal entries for the preparation of the consolidated financial statements of the Parent. (iii) Compare and contrast the accounting treatment/principles that you had applied in the independent scenarios in each part in preparing the journal entries and consolidation journal entries. a)On 20 December 20x1, a 60%-owned Subsidiary paid rental of $200,000 to its Parent.The Parent recognised the rental as income whilst the Subsidiary company recognised the rental paid as an expense. The space area rented by the Subsidiary from the Parent comprises 2% of the building for which the Parent rented out to other external parties. In the separate financial statements of the Parent, the…
During the current year, an entity acquires another entity in a transaction properly accounted for as a business acquisition. At the time of the acquisition, some of the information for valuing assets was incomplete. How should the acquirer account for the incomplete information in preparing its financial statements immediately after the acquisition? a. Record the uncertain items at a provisional amount measured at the date of acquisition. b. Record a contra account to the investment account for the amount involved c. Do not record the uncertain items until complete information is available d. Record the uncertain items at the carrying amount of the acquire
Help please get the ans accounting question
S1: A stock acquisition occurs when one corporation pays cash, issue stock, orissues debt for all or part of the voting stock and of another company; and the acquired company dissolves and ceases to exist as a separate legal entity. S2: In an asset acquisition, the books of the acquired company are closed out and its assets and liabilities are transferred to the books of the acquirer. A. Both statements are correct.B. Only S2 is correct.C. Only S1 is correct.D. Both statements are incorrect.
Which of the following statements regarding the accounting for business combinations is false? Review Later The acquirer in a business combination will anly recognize the labilities assumed if they meet the definition of liabilities and are part of the business combination transaction. Under the acquisition method, the identifiable assets acquired during a business combination are measured at their acquisition- date fair values. Goodwill is the difference between the consideration transferred by the acquirer to the acquiree and the fair value of identifiable assets acquired. The identifiable assets acquired, liabilities assumed, and noncontrolling interest in the acquiree are recognized separately from the goodwill arising out of a business combination.