Adverse financial and operating circumstances warrant that Solid Company should undergo a quasi-reorganization at year-end. Inventory with a fair value of P2,000,000 is currently recorded at cost of P2,500,000. * Plant assets with a fair value of P7,000,000 are currently recorded at P8,500,000, net of accumulated depreciation: Individual shareholders contribute P4,000,000 to create additional capital to facilitate the quasi-reorganization. No new shares are issued. * The par value of the share is reduced from P25 to P5. The entity reported the following shareholders' equity prior to the quasi-reorganization: Share capital, P25 par, 100,000 shares outstanding Share premium 2,500,000 1,750,000 Retained earnings (deficit) (3,000,000) After the quasi-organization, what amount should be reported as share premium? a. 2,750,000 b. 3,250,000 c. 3,750,000 d. 1,750,000 000.000.0 QU

Adverse financial and operating circumstances warrant that Solid Company should undergo a quasi-reorganization at year-end. Inventory with a fair value of P2,000,000 is currently recorded at cost of P2,500,000. * Plant assets with a fair value of P7,000,000 are currently recorded at P8,500,000, net of accumulated depreciation: Individual shareholders contribute P4,000,000 to create additional capital to facilitate the quasi-reorganization. No new shares are issued. * The par value of the share is reduced from P25 to P5. The entity reported the following shareholders' equity prior to the quasi-reorganization: Share capital, P25 par, 100,000 shares outstanding Share premium 2,500,000 1,750,000 Retained earnings (deficit) (3,000,000) After the quasi-organization, what amount should be reported as share premium? a. 2,750,000 b. 3,250,000 c. 3,750,000 d. 1,750,000 000.000.0 QU

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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Lee Corp. owned the following assets when it came out of a Chapter 11 bankruptcy: Inventory – Book value $215,000; fair value $180,000 Land --- Book value $95,000; fair value $160,000 Buildings --- Book value $330,000; fair value $345,000 Equipment --- Book value $410,000; fair value $215,000. Lee Corp. had a fresh start reorganization value of $1,250,000. Required: What amount of goodwill should have been recognized in recording the reorganization?
Herbert, Inc., acquired all of Rambis Company’s outstanding stock on January 1, 2020, for $649,000 in cash. Annual excess amortization of $19,800 results from this transaction. On the date of the takeover, Herbert reported retained earnings of $410,000, and Rambis reported a $226,000 balance. Herbert reported internal net income of $42,500 in 2020 and $55,400 in 2021 and declared $10,000 in dividends each year. Rambis reported net income of $28,500 in 2020 and $41,400 in 2021 and declared $5,000 in dividends each year. a. Assume that Herbert’s internal net income figures above do not include any income from the subsidiary. If the parent uses the equity method, what is the amount reported as consolidated retained earnings on December 31, 2021? What would be the amount of consolidated retained earnings on December 31, 2021, if the parent had applied either the initial value or partial equity method for internal accounting purposes? b. Under each of the following situations, what is…
Herbert, Inc., acquired all of Rambis Company’s outstanding stock on January 1, 2020, for $652,000 in cash. Annual excess amortization of $13,700 results from this transaction. On the date of the takeover, Herbert reported retained earnings of $498,000, and Rambis reported a $232,000 balance. Herbert reported internal net income of $44,750 in 2020 and $58,350 in 2021 and declared $10,000 in dividends each year. Rambis reported net income of $23,300 in 2020 and $36,900 in 2021 and declared $5,000 in dividends each year. a. Assume that Herbert’s internal net income figures above do not include any income from the subsidiary. If the parent uses the equity method, what is the amount reported as consolidated retained earnings on December 31, 2021? What would be the amount of consolidated retained earnings on December 31, 2021, if the parent had applied either the initial value or partial equity method for internal accounting purposes? Equity method, initial value method and partial…
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Smith Corporation has gone through bankruptcy and is ready to emerge as a reorganized entity on December 31, 2017. On this date, the company has the following assets (fair value is based on discounting the anticipated future cash flows): Book value Fair value Accounts Receivable $20000 $18000 Inventory 143000 111000 Land and buildings 250000 278000 Machinery 144000 121000 Patents 100000 125000 The company has a reorganization value of $800,000.Smith has 50,000 shares of $10 par value common stock outstanding. A deficit retained earnings balance of $670,000 also is reported. The owners will distribute 30,000 shares of this stock as part of the reorganization plan.The company’s liabilities will be settled as follows:∙ Accounts payable of $180,000 (existing at the date on which the order for relief was granted) will be settled with an 8 percent, two-year note for $35,000.∙ Accounts payable of $97,000 (incurred since the date on which the order for relief was granted)…
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During the current year, a company properly classified as held for sale and then disposed of a component in a strategic shift. The carrying amount of the component was $820,000 at the time of its classification as held for sale, and no loss was recognized for a write-down to fair value minus cost to sell. Its fair value minus cost to sell at all relevant times was $900,000. The assets were actually sold for $600,000. The company should recognize a loss on disposal equal to A. Extraordinary loss of $220,000. $220,000. $300,000. $820,000. O B. C. D. + Previous Directions: Select the best answer. Mark Review Items Copyright | Privacy Policy | Employment 53 seconds Next->