**Asset Acquisition vs. Stock Acquisition (Fair Value is Different from Book Value)**The following financial statement information is for an investor company and an investee company on January 1, 2013. On January 1, 2013, the investor company's common stock had a traded market value of $17.5 per share, and the investee company's common stock had a traded market value of $15.5 per share.| | Book Values | Fair Values ||-----------------------------|-------------------------------|----------------------------------|| | Investor | Investee | Investor | Investee || **Receivables & inventories**| $50,000 | $25,000 | $45,000 | $22,500 || **Land** | $100,000 | $50,000 | $150,000 | $75,000 || **Property & equipment** | $112,500 | $50,000 | $125,000 | $65,000 || **Trademarks & patents** | - | $75,000 | - | $40,000 || **Total assets** | $262,500 | $125,000 | $395,000 | $202,500 || **Liabilities** | $75,000 | $40,000 | $90,000 | $45,000 || **Common stock ($1 par)** | $10,000 | $5,000 | - | - || **Additional paid-in capital**| $140,000 | $75,000 | - | - || **Retained earnings** | $37,500 | $5,000 | - | - || **Total liabilities & equity**| $262,500 | $125,000 | $90,000 | $45,000 || **Net assets** | $187,500 | $85,000 | $305,000 | $155,000 |**Required (Parts a. and b. are independent of each other.)**This table provides a clear comparison of the book values and fair values of assets and liabilities for both the investor and investee companies, providing essential information for ### Example of Investment Accounting and Consolidation#### Case Study AssumptionsSuppose that the investor company issued 9,500 new shares of the investor company's common stock. This issuance was in exchange for all individually identifiable assets and liabilities of the investee company. The financial information presented below was prepared immediately before the transaction. The goal is to provide the Investor Company's balances (i.e., on the investor's books, before consolidation) for the following accounts immediately following the acquisition of the investee's net assets.#### a. Pre-Consolidation Balances with Identifiable Assets and Liabilities**Given Data:**- **Receivables & Inventories:** $72,500- **Land:** $175,000- **Property & Equipment:** $0- **Trademarks & Patents:** $0- **Investment in Investee:** $0- **Goodwill:** $0\[\begin{array}{|c|c|}\hline\text{Receivables & Inventories} & \$72,500 \\ \hline\text{Land} & \$175,000 \\ \hline\text{Property & Equipment} & \$0 \\ \hline\text{Trademarks & Patents} & \$0 \\ \hline\text{Investment in Investee} & \$0 \\ \hline\text{Goodwill} & \$0 \\ \hline\text{Total Assets} & \$ \\ \hline\text{Liabilities} & \$0 \\ \hline\text{Common Stock (\$1 par)} & \$0 \\ \hline\text{Additional Paid-In Capital} & \$0 \\ \hline\text{Retained Earnings} & \$0 \\ \hline\text{Total Liabilities and Equity} & \$ \\ \hline\end{array}\]#### b. Pre-Consolidation Balances with Common Stock ExchangeAssume that the investor company issued 9,500 new shares of the investor company's common stock in exchange for all the investee company's common stock. The financial information presented below was prepared immediately before this transaction.**Given Data:**- **Receivables & Inventories:** $0- **Land:** $0- **Property & Equipment:** $0- **Trademarks & Patents:** $

A balance sheet is an accounting report that shows a corporation's assets liabilities, and…

bove, was prepared immediately before this transaction. Provide the Investor Company's balances (i.e., on the investor's books, before consolidation) for the following accounts immediately following the acquisition of the investee's ssets: Receivables & Inventories $ 72.500 175,000 and "roperty & Equipment Trademarks & Patents vestment in Investee Soodwill otal Assets iabilities Common Stock ($1 par) additional Paid-In Capital tetained Earnings otal Liabilities and Equity $ and Property & Equipment rademarks & Patents vestment in Investee Goodwill otal Assets $ iabilities Common Stock ($1 par) dditional Paid-In Capital tetained Earnings S 0 $ $ 0 0 0 0 0 Assume that the investor company issued 9,500 new shares of the investor company's common stock in exchange for all of the investee company's common stock. The financial information presented, above, was prepared immed efore this transaction. Provide the Investor Company's balances (i.e., on the investor's books, before consolidation) for the following accounts immediately following the acquisition of the investee's net assets: Receivables & Inventories $ 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

bove, was prepared immediately before this transaction. Provide the Investor Company's balances (i.e., on the investor's books, before consolidation) for the following accounts immediately following the acquisition of the investee's ssets: Receivables & Inventories $ 72.500 175,000 and "roperty & Equipment Trademarks & Patents vestment in Investee Soodwill otal Assets iabilities Common Stock ($1 par) additional Paid-In Capital tetained Earnings otal Liabilities and Equity $ and Property & Equipment rademarks & Patents vestment in Investee Goodwill otal Assets $ iabilities Common Stock ($1 par) dditional Paid-In Capital tetained Earnings S 0 $ $ 0 0 0 0 0 Assume that the investor company issued 9,500 new shares of the investor company's common stock in exchange for all of the investee company's common stock. The financial information presented, above, was prepared immed efore this transaction. Provide the Investor Company's balances (i.e., on the investor's books, before consolidation) for the following accounts immediately following the acquisition of the investee's net assets: Receivables & Inventories $ 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

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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Parent Corporation acquired all the identifiable net assets of Sub Company by issuing ordinary shares on January 2. 2022. Partial balance sheet for the companies prior to the business combination and immediately following the combination is provided: Parent 65,000 Consolidated 60,000 Sub 25,000 20,000 45,000 140,000 10,000 240,000 Cash Accounts receivable 72,000 94,000 Inventory Buildings Goodwill 33,000 400,000 88,000 650,000 Total assets 570,000 75.000 350,000 Accounts payable Bonds payable Common stock, P2 par Share premium Retained earnings Total liabilities and equities 50,000 25,000 100,000 25,000 20,000 70,000 240,000 250,000 100,000 160,000 65,000 105,000 570,000 100,000 The only consideration transferred is the issuance of shares with fair value of P8. Parent also paid business combination expenses, share issue costs are twice the amount of indirect costs. Parent and Sub are SMES.
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for required b have to prepare consolidation for entries G S A I D E TI G *
5. how much is the goodwill/(gain from bargain purchase) at the date of acquisition? 6. how much is the total assets at the date of acquisition?
White Bright Limited has three subsidiary Companies as on 31st March, 2018. Based upon the information given in the following, ascertain how the Cost of Investment will be treated in the Consolidated Balance Sheet. Particulars Amount in Millions Hazy Limited Clear Limited Sun Limited Investment made 205.00 117.00 145.00 Percent of Shares Owned 60% 65% 75% Assets at the time of Investment 625.40 314.84 443.75 Liabilities at the time of Investment 260.44 134.84 329.55 don't give hand written answers plz
P3.4 Consolidated Balance Sheet Working Paper, Bargain Purchase On January 1, 2019, Paxon Corporation acquired all of the outstanding common stock of Saxon Company for $1.7 billion cash. The balance sheets of Paxon and Saxon, immediately prior to the combination, are shown below: Balance Sheets (in millions) Assets Cash and receivables. Inventory. Equity method investments Land.. Buildings and equipment, net Total assets Liabilities and Shareholders' Equity Current liabilities.. Long-term debt Common stock, par value Additional paid-in capital. Retained earnings Total liabilities and shareholders' equity Paxon (in millions) Inventory.. Equity method investments Land.... Buildings and equipment, net $2,860 1,700 - 650 2,400 $7,610 $1,500 2,000 500 1,200 2,410 $7,610 Saxon $ 720 900 300 175 600 $2,695 $1,000 400 100 350 845 $2,695 Several of Saxon's assets had fair values that were different from their book values. Estimates of the fair values of these items follow: Estimated Fair Value…
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Prepare and compute for the CONSOLIDATED EQUITY at the date of acquisition.
Hh1.
Determine the consolidated amounts at the time of acquisition: Consolidated Assets _____ Consolidated Liability _____ Consolidated Share Capital _____ Consolidated APIC _____ Consolidated RE _____ Consolidated SHE _____
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