In a qualifying reorganization, Cato Corporation exchanges $1,200,000 worth of stock and property valued at $500,000 ($245,000 basis) for all of Firestar Cor- poration’s assets, which have a value of $1,700,000 and a $500,000 basis. Firestar dis- tributes the property received from Cato. The exchange meets the § 368 requirements. What is Cato’s recognized gain/loss from the reorganization? What is Firestar’s recognized gain/loss from the reorganization?
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In a qualifying reorganization, Cato Corporation exchanges $1,200,000 worth of stock and property valued at $500,000 ($245,000 basis) for all of Firestar Cor- poration’s assets, which have a value of $1,700,000 and a $500,000 basis. Firestar dis- tributes the property received from Cato. The exchange meets the § 368 requirements.
- What is Cato’s recognized gain/loss from the reorganization?
- What is Firestar’s recognized gain/loss from the reorganization?
The recognized gain would be calculated by deducting the adjusted basis from the fair market value.
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- On Jan 1, 2019, Rudd Company acquired 100% of the common stock of Wilton Company. At that time, Rudd held land with a book value of $100,000 and a fair value of $260,000; Wilton held land with a book value of $50,000 and fair value of $600,000. at what amount would land be reported in Rudd Company balance sheet prepared immediately after the merger ? Select one: a. 860,000 b. 550,000 c. 700,000 d. 590,000Boulder, Inc., obtained 90 percent of Rock Corporation on January 1, 2019. Annual amortization of $25,000 is applicable on the allocations of Rock's acquisition-date business fair value. On January 1, 2020, Rock acquired 75 percent of Stone Company's voting stock. Excess business fair-value amortization on this second acquisition amounted to $11,800 per year. For 2021, each of the three companies reported the following information accumulated by its separate accounting system. Separate operating income figures do not include any investment or dividend income. Separate Operating Income Dividends Declared Boulder $360,900 $120,000 Rock 124,900 21,000 Stone 188,000 41,000 Required: What is consolidated net income for 2021? How is 2021 consolidated net income distributed to the controlling and noncontrolling interests? Amount a. Consolidated net income for 2021 b. Controlling interest in consolidated net income…On July 1, 2021, Truman Company acquired a 70 percent interest in Atlanta Company in exchange for consideration of $835,275 in cash and equity securities. The remaining 30 percent of Atlanta's shares traded closely near an average price that totaled $357,975 both before and after Truman's acquisition. In reviewing its acquisition, Truman assigned a $140,000 fair value to a patent recently developed by Atlanta, even though it was not recorded within the financial records of the subsidiary. This patent is anticipated to have a remaining life of five years. The following financial information is available for these two companies for 2021. In addition, the subsidiary's income was earned uniformly throughout the year. The subsidiary declared dividends quarterly.
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