Business Combination Versus Asset AcquisitionAs part of a project, Webflow Inc. acquires these assets from Digital Sea Company (in millions):Fair Value$4CashTrading debt investmentsEquipmentin process R&D624060The in-process R&D has no alternative future use. Webflow pays $335 million in cash for the acquired assets, and also pays $5 million in cash for legal and advisory costsNote: Provide all answers in millions and round answers to the nearest whole number. For example. 16.355.000 would be 16.a Prepare the journal entry to record the acquisition if it qualifies as a business combination.DebitCreditCashto record the business combination00000DO010000340it is an ecat acnuutine Ama the cash and diethindacate The in-process R&D has no alternative future use. Webflow pays $335 million in cash for the acquired assets, and also pays $5 million in cash for legal and advisory costs.Note: Provide all answers in millions and round answers to the nearest whole number. For example. 16.355.000 would be 16.a. Prepare the journal entry to record the acquisition if it qualifies as a business combination.DebitCreditVVCashTo record the business combinationCashTo record the asset acquisibon00000D0b. Prepare the journal entry to record the acquisition if it is an asset acquisition, Assume the cash and trading investments are nonqualifying assetsDebitCredit00003400000000940

The asset acquisition and the business combination are two types of methods used in the acquisition.…

Business Combination Versus Asset Acquisition As part of a project. Webflow Inc. acquires these assets from Digital Sea Company (in millions Fair Value D $4 Cash Trading debt investments Equipment In process R&D 6 240 60 The in-process R&D has no alternative future use. Webflow pays $335 million in cash for the acquired assets, and also pays $5 milion in cash for legal and advisory costs. Note: Provide all answers in millions and round answers to the nearest whole number. For example. 16.355.000 would be 16. a. Prepare the journal entry to record the acquisition if it qualifies as a business combination. Debit Credit to record the business combination 0 0 0 0 0 0 0 0

Business Combination Versus Asset Acquisition As part of a project. Webflow Inc. acquires these assets from Digital Sea Company (in millions Fair Value D $4 Cash Trading debt investments Equipment In process R&D 6 240 60 The in-process R&D has no alternative future use. Webflow pays $335 million in cash for the acquired assets, and also pays $5 milion in cash for legal and advisory costs. Note: Provide all answers in millions and round answers to the nearest whole number. For example. 16.355.000 would be 16. a. Prepare the journal entry to record the acquisition if it qualifies as a business combination. Debit Credit to record the business combination 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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Borrowing cost (IAS-23) If the acquisition/construction of asset is financed through borrowings then any interest paid on such debt would be capitalized in the value of asset. Test your understanding.3 Acquisition Costs of Realty: Pollachek Co. purchased land as a factory site for $450,000. Process of tearing down two old buildings on the site and constructing the factory required 6 months, The company paid $42,000 to raze the old buildings and sold salvaged lumber and brick for $6,300. Legal fees of $1,850 were paid for title investigation and drawing the purchase contract. Pollachek paid $2,200 to an engineering firm for a land survey, and $65,000 for drawing the factory plans. The land survey had to be made before definitive plans could be drawn. Title insurance on the property cost $1,500, and a liability insurance premium paid during construction was $900. The contractor's charge for construction was $2,740,000. The company paid the contractor in two installments: $1,200,000 at…
Dynamo Manufacturing paid cash to acquire the assets of an existing company. Among the assets acquired were the following items. Patent with 4 remaining years of legal life $38,600 Goodwill 36,100 Dynamo’s financial condition just prior to the acquisition of these assets is shown in the following statements model. Balance Sheet Income Statement Assets = Liabilities + Stockholders’ Equity Revenue − Expenses = Net Income Statement of Cash Flows Cash + Patent + Goodwill 92,500 + NA + NA = NA + 92,500 NA − NA = NA NA Required Compute the annual amortization expense for these items. Show the acquisition of the intangible assets and the related amortization expense for Year 1 in a horizontal statements model. Prepare the journal entries to record the acquisition of the intangible assets and the related amortization for year 1.
Assume that a drilling machine is acquired for the following consideration: cash: $200,000 shares: 20,000 shares with a market value of $4.50 each Machine: Cost $100,000, accumulated depreciation, $75,000, fair value $37,000 The buying company also agrees to assume the liability of the selling company’s accounts payable of $25 000 as part of the drilling machine acquisition. Required: Calculate the acquisition cost of the drilling machine
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