In the year ended June 30 2021, Lorelai Ltd, a reporting entity, acquired the assets and assumed the liabilities of the Rory Teens operation from Gilmore Ltd for $10,000,000. At the date of acquisition, the fair values of the net separable identifiable assets and liabilities of the operation were $8,000,000 and $1,000,000 respectively. Based on this information, the transaction has resulted in: O a. The acquisition of certain assets and liabilities, which is not a business combination since Rory Teens is not managed to provide a return to investors but only to provide a return to Gilmore Ltd. O b. None of these answers is correct. Oc. The acquisition of certain assets and liabilities, which is not a business combination since Rory Teens is not a business but simply part of the Gilmore Ltd business. O d.A business combination of Lorelai Ltd and Rory Teens.

In the year ended June 30 2021, Lorelai Ltd, a reporting entity, acquired the assets and assumed the liabilities of the Rory Teens operation from Gilmore Ltd for $10,000,000. At the date of acquisition, the fair values of the net separable identifiable assets and liabilities of the operation were $8,000,000 and $1,000,000 respectively. Based on this information, the transaction has resulted in: O a. The acquisition of certain assets and liabilities, which is not a business combination since Rory Teens is not managed to provide a return to investors but only to provide a return to Gilmore Ltd. O b. None of these answers is correct. Oc. The acquisition of certain assets and liabilities, which is not a business combination since Rory Teens is not a business but simply part of the Gilmore Ltd business. O d.A business combination of Lorelai Ltd and Rory Teens.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Del Luna Corporation concluded that the fair value of Scarlet Company was P160,000 and paid that amount to acquire all of its net assets. Scarlet reported assets with a book value of P120,000 and a fair value of 196,000 and liabilities with a book value and fair value of P46,000 on the date of combination. Del Luna also paid P6,000 to a search firm for finder’s fees related to acquisition. What amount will be recorded as goodwill by Del Luna Corporation? a. 10,000 b. 26,000 c. 16,000 d. 0
(A) What is the capitalized cost of the acquired PPE if ABC Corp. made the following property acquisitions on Jan. 1, 2021: a. Acquired a piece of land in exchange for its shares. The shares have a total fair value of P5,000,000 while the fair value of the land is P5,100,000. b. Purchased a machinery on installment. The cash price is P800,000 while the installment price is P1,000,000. It required a down payment of P200,000 and the balance payable every Jan. 1 for 4 years, starting in the year 2022. 1. What is the capitalized cost? (B) ABC acquired for a lumpsum price of P6,000,000 a piece of land and the building on it. The land and building have fair values of P4,2000,000 and P2,800,000 respectively. The building is still usable but the entity plans to demolish it and construct a new building. Later, total demolition cost incurred was P400,000 but scraps were gathered and sold for P50,000. The new building had a total construction cost of P7,000,000, useful life of 25 years, and a…
Del Luna Corporation concluded that the fair value of Scarlet Company was P160,000 and paid that amount to acquire all of its net assets. Scarlet reported assets with a book value of P120,000 and a fair value of 196,000 and liabilities with a book value and fair value of P46,000 on the date of combination. Del Luna also paid P6,000 to a search firm for finder’s fees related to acquisition. What amount will be recorded as goodwill by Del Luna Corporation? 26,000 0 16,000 10,000
Plaintain Company owns 100% of Syncopati Inc. The excess of acquisition cost over book value was attributed entirely to previously unrecorded identifiable intangibles. For 2021, Syncopati reported net income of $6,000,000 and declared and paid dividends of $1,500,000. Amortization of the previously unrecorded identifiable intangibles for 2021 is $1,200,000. The following information is available regarding intercompany transactions: 1. During 2021, Syncopati sold services to Plaintain for $1,000,000. Plaintain still owes Syncopati $100,000 for those services at year-end. 2. Plaintain's ending inventory at December 31, 2021, included merchandise acquired from Syncopati; the unconfirmed profit on this inventory was $300,000. 3. Plaintain's ending inventory at December 31, 2020, included merchandise acquired from Syncopati; the unconfirmed profit on this inventory was $400,000. 4. Syncopati's ending inventory at December 31, 2021, included merchandise acquired from Plaintain; the…
On 1 July 2019, Frankie Ltd acquired 80% of the issued shares of Sinatra Ltd for $250,000. At that date, Sinatra Ltd's equity consisted of share capital of $200,000 and retained earnings of $300,000. At acquisition date, all identifiable net assets of Sinatra Ltd were recorded at amounts equal to fair value. At 1 July 2019, the fair value of the non-controlling interest was $50,000. Required: (a) Calculate goodwill using the partial goodwill method. (b) Explain the reason why an adjustment is required to the NCI share of profit, for a non-current asset revalued to fair value at acquisition date.
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On July 1, 2021, PASSETS acquired all the net assets of SIABS at its underlying book value, which resulted to neither a gain nor a goodwill. Considerations transferred included cash paid, bonds issued, and stocks issued. Apart from the transaction to acquire the net assets of and to transfer the consideration to the acquiree, PASSETS also has the following transactions: PASSETS paid P150,000 to SEC to register the newly issued shares PASSETS incurred the obligation to pay P50,000 for printing of the stock certificates of the new shares issued. PASSETS paid Mr. Louis McRasigan P100,000 cash for his professional services in administering the business combination A total of P1,000,000 for general and administrative expenses were incurred by the company, half of which was attributable to the business combination and treated as an unpaid indirect cost. a. 200,000 b. 1,300,000 c. 250,000 d. 800,000 Among the four related transactions above, how much will decrease assets of the acquirer?
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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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