During 2021, Carla Vista Company purchased the net assets of Martinez Corporation for $219560O. On the date of the transaction, Martinez had $598800 of liabilities. The fair value of Martinez's assets when acquired were as follows: Current assets $1077840 Noncurrent assets 2514960 $3592800 How should the $798400 difference between the fair value of the net assets acquired ($2994000) and the cost ($2195600) be accounted for by Carla Vista? O The $798400 difference should be recognized as a gain. O The current assets should be recorded at $1077840 and the noncurrent assets should be recorded at $1716560.. O The $798400 difference should be credited to retained earnings. O A deferred credit of $798400 should be set'up and then amortized to income over a period not to exceed forty years.

During 2021, Carla Vista Company purchased the net assets of Martinez Corporation for $219560O. On the date of the transaction, Martinez had $598800 of liabilities. The fair value of Martinez's assets when acquired were as follows: Current assets $1077840 Noncurrent assets 2514960 $3592800 How should the $798400 difference between the fair value of the net assets acquired ($2994000) and the cost ($2195600) be accounted for by Carla Vista? O The $798400 difference should be recognized as a gain. O The current assets should be recorded at $1077840 and the noncurrent assets should be recorded at $1716560.. O The $798400 difference should be credited to retained earnings. O A deferred credit of $798400 should be set'up and then amortized to income over a period not to exceed forty years.

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter12: Auditing Long-lived Assets And Merger And Acquisition Activity

Section: Chapter Questions

Problem 37RQSC

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During 2021, Carla Vista Company purchased the net assets of Sandhill Corporation for $2219800. On the date of the transaction, Sandhill had $605400 of liabilities. The fair value of Sandhill's assets when acquired were as follows: Current assets $1089720 Noncurrent assets 2542680 $3632400 How should the $807200 difference between the fair value of the net assets acquired ($3027000) and the cost ($2219800) be accounted for by Carla Vista?
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On January 1, 2021, Smith Company sold a piece of machinery to Gaby Company for P1,900,000. Because of the entity's commitments to its customers to provide their needs for the next three years, Smith Company simultaneously leased back the machinery. The transfer of the asset to the buyer qualifies to be accounted for as a sale under IFRS 15. Information relating to this transaction follows: Fair value of machinery - P2,200,000 Carrying amount of machinery - P1, 700,000 Remaining useful life of the machinery - 8 years Lease term - 3 years Annual rent payable at the end of each year beginning, December 31, 2021- P500,000 Market rate of interest - 10% The present value of an ordinary annuity of 1 at 10% for 3 periods is 2.4869 The present value of an annuity due of 1 at 10% for 3 periods is 2.7355 1. How much is the interest expense for 2021 on the lease liability relating to the right retained in the sale-leaseback transaction? (round off your final answer to the nearest peso value)…