☐ Compute the investment to be recorded at the date of acquisition. A) $1,750. B) $1,755. C) $1,725. CASE 1 Presented below are the financial balances for the BonGiovi Company and the Terens Company as of December 31, 2017, immediately before BonGiovi acquired Terens. Also included are the fair values for Terens Company's net assets at that date (thousands of US$). D) $1,760. E) $1,765. Compute consolidated inventory immediately following the acquisition. BonGiovi Book Value 31.12.2017 Terens Book Value 31.12.2017 Terens Fair Value 31.12.2017 Cash 870 240 240 A) $1,650. Receivables 660 600 600 Inventory 1,230 420 580 B) $1,810. Land 1,800 260 250 C) $1,230. Buildings (Net) 1,800 540 650 Equipment (net) 660 380 400 Accounts Payable (570) (240) (240) Accrued expenses (270) (60) (60) D) $580. E) $1,830. Long term Liabilities (2,700) (1,020) (1,120) Common Stock (1,980) ($20par) Common Stock ($5 (420) par) Additional paid in (210) (180) capital B) $1,800. Retained earnings (1,170) (480) Revenue (2,880) Expenses 2,760 (660) 620 Compute consolidated land immediately following the acquisition. A) $2,060. Note: Parenthesis indicates a credit balance Assume a business combination took place at December 31, 2017. BonGiovi issued 50 shares of its common stock with a fair value of $35 per share for all of the outstanding common shares of Terens. Stock issuance costs of $15 (in thousands) and direct costs of $10 (in thousands) were paid to effect this acquisition transaction. To settle a difference of opinion regarding Terens fair value, BonGiovi promises to pay an additional $5.2 (in thousands) to the former owners if Terens earnings exceed a certain sum during the next year. Given the probability of the required contingency payment and utilizing a 4% discount rate, the expected present value of the contingency is $5 (in thousands). C) $260. D) $2,050. E) $2,070.
☐ Compute the investment to be recorded at the date of acquisition. A) $1,750. B) $1,755. C) $1,725. CASE 1 Presented below are the financial balances for the BonGiovi Company and the Terens Company as of December 31, 2017, immediately before BonGiovi acquired Terens. Also included are the fair values for Terens Company's net assets at that date (thousands of US$). D) $1,760. E) $1,765. Compute consolidated inventory immediately following the acquisition. BonGiovi Book Value 31.12.2017 Terens Book Value 31.12.2017 Terens Fair Value 31.12.2017 Cash 870 240 240 A) $1,650. Receivables 660 600 600 Inventory 1,230 420 580 B) $1,810. Land 1,800 260 250 C) $1,230. Buildings (Net) 1,800 540 650 Equipment (net) 660 380 400 Accounts Payable (570) (240) (240) Accrued expenses (270) (60) (60) D) $580. E) $1,830. Long term Liabilities (2,700) (1,020) (1,120) Common Stock (1,980) ($20par) Common Stock ($5 (420) par) Additional paid in (210) (180) capital B) $1,800. Retained earnings (1,170) (480) Revenue (2,880) Expenses 2,760 (660) 620 Compute consolidated land immediately following the acquisition. A) $2,060. Note: Parenthesis indicates a credit balance Assume a business combination took place at December 31, 2017. BonGiovi issued 50 shares of its common stock with a fair value of $35 per share for all of the outstanding common shares of Terens. Stock issuance costs of $15 (in thousands) and direct costs of $10 (in thousands) were paid to effect this acquisition transaction. To settle a difference of opinion regarding Terens fair value, BonGiovi promises to pay an additional $5.2 (in thousands) to the former owners if Terens earnings exceed a certain sum during the next year. Given the probability of the required contingency payment and utilizing a 4% discount rate, the expected present value of the contingency is $5 (in thousands). C) $260. D) $2,050. E) $2,070.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:☐
Compute the investment to be recorded at the date of acquisition.
A) $1,750.
B) $1,755.
C) $1,725.
CASE 1
Presented below are the financial balances for the BonGiovi Company and the Terens
Company as of December 31, 2017, immediately before BonGiovi acquired Terens. Also
included are the fair values for Terens Company's net assets at that date (thousands of US$).
D) $1,760.
E) $1,765.
Compute consolidated inventory immediately following the acquisition.
BonGiovi
Book Value
31.12.2017
Terens
Book Value
31.12.2017
Terens
Fair Value
31.12.2017
Cash
870
240
240
A) $1,650.
Receivables
660
600
600
Inventory
1,230
420
580
B) $1,810.
Land
1,800
260
250
C) $1,230.
Buildings (Net)
1,800
540
650
Equipment (net)
660
380
400
Accounts Payable
(570)
(240)
(240)
Accrued expenses
(270)
(60)
(60)
D) $580.
E) $1,830.
Long term Liabilities
(2,700)
(1,020)
(1,120)
Common Stock
(1,980)
($20par)
Common Stock ($5
(420)
par)
Additional paid in
(210)
(180)
capital
B) $1,800.
Retained earnings
(1,170)
(480)
Revenue
(2,880)
Expenses
2,760
(660)
620
Compute consolidated land immediately following the acquisition.
A) $2,060.
Note: Parenthesis indicates a credit balance
Assume a business combination took place at December 31, 2017. BonGiovi issued 50 shares
of its common stock with a fair value of $35 per share for all of the outstanding common
shares of Terens. Stock issuance costs of $15 (in thousands) and direct costs of $10 (in
thousands) were paid to effect this acquisition transaction. To settle a difference of opinion
regarding Terens fair value, BonGiovi promises to pay an additional $5.2 (in thousands) to the
former owners if Terens earnings exceed a certain sum during the next year. Given the
probability of the required contingency payment and utilizing a 4% discount rate, the expected
present value of the contingency is $5 (in thousands).
C) $260.
D) $2,050.
E) $2,070.
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