New Inc. acquires 100% of the stock of Old Co. on January 4, 2020, for $4,100 cash. As of that date, Oldhas the following trial balance:Debit CreditCash$500Accounts receivable600Inventory900Buildings (net) (5-year life)1,600Equipment (net) (2-year life) 1,000Land900Accounts payable$400Long-term liabilities (due 12/31/22)1, 900Common stock1,000Additional paid-in capital700 Retained earnings1,500 Total $5,500$5,500Net income and dividends reported by Old for 2020 and 2021 follow:20202021 Net income$120$140 Dividends4050The fair value of Old Co.'s net assets that differ from their book values are listed below:Fair ValueBuildings$1,200 Equipment1, 350 Land 1,300 Long-term liabilities1,750Any excess of consideration transferred over fair value of net assets acquired is considered goodwill withan indefinite life.Compute the amount of Old Co.'s long-term liabilities that would be reported in a December 31, 2020,consolidated balance sheet.correct answer is 1800 since I already got it incorrect. Please explain.

To determine the amount of Old Co.'s long-term liabilities that would be reported in the December…

Answered: New Inc. acquires 100% of the stock of…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter12: Intangibles

Section: Chapter Questions

Problem 18E

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On July 1, 2019, Aldrich Company purchased as an available-for-sale security 200,000 face value, 9% U.S. Treasury notes for 194,000. The notes mature July 1, 2020, and pay interest semiannually on January 1 and July 1. The notes were sold on December 1, 2019, for 199,000. Aldrich normally uses straight-line amortization on all of its notes. In its income statement for the year ended December 31, 2019, what amount should Aldrich report as a gain on the sale of the available-for-sale security? a. 2,500 b. 3,500 c. 5,000 d. 6,000
Jackson Company acquires 100% of the stock of Clark Corporation on January 1, 2020, for $4,100 cash. As of that date Clark has the following trial balance: Debit Credit Cash $ 500 Accounts receivable 600 Inventory 900 Buildings (net) (5 year life) 1,600 Equipment (net) (2 year life) 1,000 Land 900 Accounts payable $ 400 Long-term liabilities (due 12/31/22) 1,900 Common stock 1,000 Additional paid-in capital 700 Retained earnings 1,500 Total $ 5,500 $ 5,500 Net income and dividends reported by Clark for 2020 and 2021 follow: 2020 2021 Net income $ 120 $ 140 Dividends 40 50 The fair value of Clark’s net assets that differ from their book values are listed below: Fair Value Buildings $ 1,200 Equipment 1,350 Land 1,300 Long-term liabilities 1,750 Any excess of consideration transferred over fair value of net assets acquired is considered goodwill with an indefinite life. A. Compute the amount of Clark’s equipment that would be reported in a December 31, 2020, consolidated balance sheet.…
Chapman Company obtains 100 percent of Abernethy Company's stock on January 1, 2020. As of that date, Abernethy has the following trial balance: Credit $ 57,300 Debit Accounts payable Accounts receivable Additional paid-in capital Buildings (net) (4-year renaining life) Cash and short-term investnents Common stock Equipment (net) (5-year remaining life) Inventory Land Long-tern liabilities (mature 12/31/23) Retained earnings, 1/1/20 Supplies Totals $ 42,200 50, 000 214, 000 82,250 250,000 375,000 98,500 117,000 170,000 409,650 16, 000 $936,950 $ 936, 950 During 2020, Abernethy reported net income of $117,500 while declaring and paying dividends of $15.000. During 2021, Abernethy reported net income of $171,250 while declaring and paying dividends of $55,000, Assume that Chapman Company acquired Abernethy's common stock for $816.280 in cash. Assume that the equipment and long-term liabilities had fair values of $396,950 and $140,720. respectively, on the acquisition date. Chapman uses…
Chapman Company obtains 100 percent of Abernethy Company's stock on January 1, 2020. As of that date, Abernethy has the following trial balance: Debit Credit Accounts payable Accounts receivable 55,100 44,700 Additional paid-in capital 50,000 Buildings (net) (4-year remaining life) 163,000 Cash and short-term investments 83,750 Common stock 250,000 Equipment (net) (5-year remaining life) 207,500 Inventory 122,000 Land 85,500 Long-term liabilities (mature 12/31/23) Retained earnings, 1/1/20 Supplies 162,500 202,150 Totals $ 13,300 719,750 $ 719,750 During 2020, Abernethy reported net income of $105,000 while declaring and paying dividends of $13,000. During 2021, Abernethy reported net income of $136,750 while declaring and paying dividends of $36,000. Assume that Chapman Company acquired Abernethy's common stock for $605,600 in cash. As of January 1, 2020, Abernethy's land had a fair value of $101,800, its buildings were valued at $227,400, and its equipment was appraised at $164,500.…
Chapman Company obtains 100 percent of Abernethy Company's stock on January 1, 2020. As of that date, Abernethy has the following trial balance: Debit Credit $ 57,300 Accounts payable Accounts receivable $ 42,200 Additional paid-in capital 50,000 214,000 Buildings (net) (4-year remaining life) Cash and short-term investments Common stock 82,250 250,000 Equipment (net) (5-year remaining Life) 375,000 Inventory 90,500 Land 117,000 170,000 Long-term liabilities (mature 12/31/23) Retained earnings, 1/1/20 409,650 Supplies 16,000 Totals $936,950 $ 936,950 During 2020, Abernethy reported net income of $117,500 while declaring and paying dividends of $15,000. During 2021, Abernethy reported net income of $171,250 while declaring and paying dividends of $55,000. Assume that Chapman Company acquired Abernethy's common stock for $816,280 in cash. Assume that the equipment and long-term liabilities had fair values of $396,950 and $140,720, respectively, on the acquisition date. Chapman uses the…
Chapman Company obtains 100 percent of Abernethy Company's stock on January 1, 2020. As of that date, Abernethy has the following trial balance: Debit Credit 2$ $ 46,600 Accounts payable Accounts receivable Additional paid-in capital Buildings (net) (4-year remaining life) Cash and short-term investments 59,500 50,000 145,000 84, 250 Common stock 250,000 Equipment (net) (5-year remaining life) Inventory 257,500 106, ө00 129,000 Land Long-term liabilities (mature 12/31/23) Retained earnings, 1/1/20 Supplies 151,000 273,050 15, 200 Totals $783,550 $ 783,550 During 2020, Abernethy reported net income of $98,500 while declaring and paying dividends of $12,000. During 2021, Abernethy reported net income of $132,250 while declaring and paying dividends of $48,000. Assume that Chapman Company acquired Abernethy's common stock for $699,850 in cash. As of January 1, 2020, Abernethy's land had a fair value of $141,400, its buildings were valued at $217,400, and its equipment was appraised at…
Chapman Company obtains 100 percent of Abernethy Company's stock on January 1, 2020. As of that date, Abernethy has the following trial balance: Debit Credit $ 50,500 Accounts payable Accounts receivable Additional paid-in capital Buildings (net) (4-year remaining life) Cash and short-term investments Common stock Equipment (net) (5-year remaining life) Inventory $ 44,100 50,000 166,000 79,250 250,000 292,500 100,500 128,000 Land Long-term liabilities (mature 12/31/23) Retained earnings, 1/1/20 Supplies 188,000 288,850 17,000 Totals $827,350 $ 827,350 During 2020, Abernethy reported net income of $103,000 while declaring and paying dividends of $13,000. During 2021, Abernethy reported net income of $144,250 while declaring and paying dividends of $58,000. Assume that Chapman Company acquired Abernethy's common stock for $694,300 in cash. As of January 1, 2020, Abernethy's land had a fair value of $142,700, its buildings were valued at $210,000, and its equipment was appraised at…
rroDiems 19 through 21 should be viewed as independent situations. They are based on the following data: Chapman Company obtains 100 percent of Abernethy Company's stock on January 1, 2020. As of that date, Abernethy has the following trial balance: Page 136 Debit Credit Accounts payable $ 50,000 Accounts receivable $ 40,000 Additional paid-in capital Buildings (net) (4-year remaining life) 50,000 120,000 Cash and short-term investments 60,000 Common stock 250,000 Equipment (net) (5-year remaining life) Inventory 200,000 90,000 Land 80,000 Long-term liabilities (mature 12/31/23) 150,000 Retained earnings, 1/1/20 100,000 Supplies 10,000 $600,000 $600,000 Totals During 2020, Abernethy reported net income of $80,000 while declaring and paying dividends of $ 10,000. During 2021, Abernethy reported net income of $110,000 while declaring and paying dividends of $30,000. LO 3-3a 1. Assume that Chapman Company acquired Abernethy's common stock for $490,000 in cash. As of January 1, 2020,…
hapman Company obtains 100 percent of Abernethy Company’s stock on January 1, 2020. As of that date, Abernethy has the following trial balance: Debit Credit Accounts payable $ 56,700 Accounts receivable $ 43,800 Additional paid-in capital 50,000 Buildings (net) (4-year remaining life) 143,000 Cash and short-term investments 80,250 Common stock 250,000 Equipment (net) (5-year remaining life) 295,000 Inventory 110,500 Land 112,000 Long-term liabilities (mature 12/31/23) 171,000 Retained earnings, 1/1/20 268,750 Supplies 11,900 Totals $ 796,450 $ 796,450 During 2020, Abernethy reported net income of $122,500 while declaring and paying dividends of $15,000. During 2021, Abernethy reported net income of $159,250 while declaring and paying dividends of $49,000. Assume that Chapman Company acquired Abernethy’s common stock for $698,050 in cash. As of…
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Huey Company acquires 100% of the stock of Solar Corporation on january 1, 2019, for $2.400,000 cash. As of that date Solor had the following account balances: Book Value Eair value Cash $630.000 $630,000 Accounts receivable 775.000 775,000 Inventory 350.000 400,000 Building-net (10 year life) 1,000,000 900,.000 Equipment-net (5 year life) 300.000 400.000 Land 600,000 900,000 Accounts Payable 125.000 125,000 Bonds Payable (Face amount S1,000,000. due 12/31/2023) 2.000.000 2,050,000 Common stock 500,000 Additional paid-in capital Retained earnings 250.000 780.000 in 2019 and 2020, Solar had net income of $250,000 and $240,000, respectively In addition, Solar paid dividends of $16,000 in both years, Inventory is assumed to be sold in 2019. Assume straight line amortization/ depreciation for assets and bonds payable. What amount of Solars single legat entity stockholders' equity will be included in the consolidated balance sheet at date of acquisition? Select one A $2.064.000 B $3,350,000…
On July 1, 2020, Blue George Company purchased 25% interest of Pink Conrad for P150,000. Blue George incurred transaction cost equal to 5% on the transaction price. On October 1, 2020, Pink Conrad declared dividends of P80,000. At the end of 2020, Pink Conrad reported net income of P200,000. On January 1, 2021, the fair values of Pink Conrad's net assets were as follows:Current Assets - P100,000;Equipment - P150,000;Patent – P120,000;Land - P50,000;Buildings - P300,000; andLiabilities - P80,000. On January 1, 2021, Blue George Company purchased 50% interest of the Pink Conrad Company by issuing 100,000 shares of its P1 par value stock when the fair value of the stock was P6.20. Pink Conrad paid for the legal fees of P10,000 and securities SEC registration of P20,000 which was reimbursed by Blue George. The Patent of Pink Conrad refers to the technology purchased by Pink Conrad from Blue George years ago. Blue George had an outstanding unearned revenue related to the Patent amounting to…

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