Make a calculation comparing the consideration given against the book value of the consideration acquired. Assume that 100% stake in the XYZ co.s equity is to be paid in cash. Question: How much is the amount of cash to be paid by AAA Co. To Xyz Co.? Solution: Consideration given:
Make a calculation comparing the consideration given against the book value of the consideration acquired. Assume that 100% stake in the XYZ co.s equity is to be paid in cash. Question: How much is the amount of cash to be paid by AAA Co. To Xyz Co.? Solution: Consideration given:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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| Make a calculation comparing the consideration given against the book value of the consideration acquired. | ||||||||||
| Assume that 100% stake in the XYZ co.s equity is to be paid in cash. | ||||||||||
Transcribed Image Text:Assume that AAA Co. plans to acquire XYZ Co. As its subsidiary on April 30, 2022.
Below are the statements of financial position of the two companies before the acquisition is made:
AAA Co. and XYZ Co.
Statement of financial position
April 30, 2022.
AAA Co.
XYZ Co.
Assets
Current Assets
Cash
1,675,300
900,250
715,350
250,125
180,375
81,000
15,000
526,500
Trade Receivables
Inventory
Prepayments
Total Current Assets
120,000
3,410,900
Non-current Assets
Equipment (net)
1,635,000
639,250
120,000
759,250
Other Assets
110,000
1,745,000
Total Non-crrent Asset:
Total Assets
5,155,900
1,285,750
Liabilities and Equity
Liabilities
Current Liabilities
Trade Payables
Loan Payable -current portion
911,000
275,000
1,186,000
305,620
Total Current Liabilities
305,620
Non-Current Liability
Loan Payable -non-current port
Total Non-cusrent Liabili
825,000
825,000
2,011,000
Total Liabilities
305,620
Equity
Common Stock
2,000,000
800,000
500,000
350,000
Additional Paid-in Capital
Retained Earnings
Total Equity
344,900
3,144,900
130,130
980,130
Total Liabilities and Equity
5,155,900
1,285.750
Transcribed Image Text:Make a calculation comparing the consideration given against the book value of the consideration acquired.
Assume that 100% stake in the XYZ co.s equity is to be paid in cash.
5 Question: How much is the amount of cash to be paid by AAA Co. To Xyz Co.?
B Solution:
o Consideration given:
1
2
3
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