Oak company is considering purchasing ekc company this question solution Oak Company is considering purchasing EKC Company. EKC's balance sheet at December31, 2016, is as follows:CashAccounts receivableInventory$46,000 Current liabilities $58,00070,000100,000Bonds payable175,000Common stock240,000Property, plant, and equipment (net) 580,000 Retained earnings 322,000$796,000$796,000At December 31, 2016, Oak discovered the following about EKC:-No allowance for uncollectible accounts has been established. An allowance of $4,400 isconsidered appropriate.-The LIFO inventory method has been used. The FIFO inventory method would be used ifEKC were purchased by Oak. The FIFO inventory valuation of December 31, 2016, endinginventory would be $158,000.-The fair value of the property, plant, and equipment (net) is $700,000.-The company has an unrecorded patent that is worth $100,000.-The book values of the current liabilities and bonds payable are the same as their marketvalues.Required:Compute the value of the goodwill if Oak pays $1,300,600 for EKC.

Step 1: Define GoodwillGoodwill is an intangible asset that will not be recognized if internally…

Answered: Oak Company is considering purchasing…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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9. Selected information on PQR Company for 2022 are shown as follows: P275,000 Increase in current assets other than cash Unrealized gain on FVOCI equity investments Net income 30,000 1,882,000 Depreciation and amortization 256,000 Treasury stock acquired for cash 100,000 Carrying value of long-term debt retired 600,000 591,000 Cash paid to settle long-term debt Cash dividends paid 175,000 Equipment acquired for cash 200,000 Increase in current liabilities 122,000 The net cash flow provided by/used from operating activities for the year ended December 31, 2022 is: (Indicate if provided or used)
Goodwill Valman Company is considering purchasing EKC Company. EKC's balance sheet at December 31, 2019, is as follows: Cash $54,000 Current liabilities $64,000 Accounts receivable 65,000 Bonds payable 219,000 Inventory 140,000 Common stock 350,000 Property, plant, and equipment (net) 600,000 Retained earnings 226,000 $859,000 $859,000 At December 31, 2019, Valman discovered the following about EKC: No allowance for uncollectible accounts has been established. An allowance of $4,500 is considered appropriate. The LIFO inventory method has been used. The FIFO inventory method would be used if EKC were purchased by Valman. The FIFO inventory valuation of the December 31, 2019, ending inventory would be $204,000. The fair value of the property, plant, and equipment (net) is $720,000. The company has an unrecorded patent that is worth $100,000. The book values of the current liabilities and bonds payable are the same as their market values. Required: 1.…
A comparative balance sheet for Gena Company appears below:GENA COMPANYComparative Balance SheetDec. 31, 2021 Dec. 31, 2020AssetsCash $ 34,000 $11,000Accounts receivable 21,000 13,000Inventory 35,000 17,000Prepaid expenses 6,000 9,000Long-term investments -0- 17,000Equipment 60,000 33,000Accumulated depreciation—equipment (20,000) (15,000)Total assets $136,000 $85,000Liabilities and Stockholders' EquityAccounts payable $ 17,000 $ 7,000Bonds payable 36,000 45,000Common stock 53,000 23,000Retained earnings 30,000 10,000Total liabilities and stockholders' equity $136,000 $85,000Additional information:1. Net income for the year ending December 31, 2021 was $35,000.2. Cash dividends of $15,000 were declared and paid during the year.3. Long-term investments that had a cost of $17,000 were sold for $14,000.4. Depreciation expense for the year was $5,000.InstructionsPrepare a full statement of cash flows for the year ended December 31, 2021, using the indirectmethod.
Venti Manufacturing Company decided to expand further by purchasing Wasserman Company. The statement of financial position of Warrior Company as of 31 December 2020 was as follows: Warrior Company Statement of Financial Position 31 December 2020 Assets RM Equity and Liabilities RM Plant assets (net) 1,025,000 Share capital-ordinary 800,000 Inventory 275,000 Retained earnings 885,000 Receivables 550,000 Accounts payable 375,000 Cash 210,000 Total assets 2,060,000 Total equity & liabilities 2,060,000 An appraisal, agreed to by the parties, indicated that the fair value of the inventory was RM350,000 and the fair value of the plant assets was RM1,125,000. The fair value of the receivables is equal to the amount reported on the statement of financial position. The agreed purchase price was RM2,095,000, and this amount was paid in cash to the…
Information for Crane Company is given below: Crane Company Balance Sheet December 31, 2021 Assets Equities Cash $ 302000 Accounts payable $ 625000 Accounts receivable (net) 1955000 Income taxes payable 193000 Inventories 2436000 Miscellaneous accrued payables 227000 Plant and equipment, Bonds payable (8%, due 2023) 1900000 net of depreciation 1983000 Preferred stock ($100 par, 6% Patents 262000 cumulative nonparticipating) 700000 Other intangible assets 75000 Common stock (no par, 60,000 Total Assets $7013000 shares authorized, issued and outstanding) 1127000 Retained earnings 2464000 Treasury stock-1500 shares of preferred (223000) Total Equities $7013000 Crane…
The comparative balance sheets for Metlock Corporation show the following information. December 312020 2019Cash $33,500 $12,900Accounts receivable 12,400 10,000Inventory 12,100 9,000Available-for-sale debt investments –0– 3,000Buildings –0– 29,800Equipment 44,800 19,900Patents 5,000 6,300 $107,800 $90,900Allowance for doubtful accounts $3,100 $4,500Accumulated depreciation—equipment 2,000 4,500Accumulated depreciation—building –0– 6,000Accounts payable 5,000 3,000Dividends payable –0– 4,900Notes payable, short-term (nontrade) 3,000 4,100Long-term notes payable 31,000 25,000Common stock 43,000 33,000Retained earnings 20,700 5,900 $107,800 $90,900 Additional data related to 2020 are as follows. 1. Equipment that had cost $11,000 and was 40% depreciated at time of disposal was sold for $2,500.2. $10,000 of the long-term note payable was paid by issuing common stock.3. Cash dividends paid were $4,900.4. On January…
The net changes in the balance sheet accounts of Amy Corporation for the year 2021 are shown below. Account Debit Credit Cash $ 103,530 Short-term investments $143,990 Accounts receivable 93,058 Allowance for doubtful accounts 15,827 Inventory 88,298 Prepaid expenses 27,132 Investment in subsidiary (equity method) 29,750 Plant and equipment 249,900 Accumulated depreciation 154,700 Accounts payable 96,033 Accrued liabilities 25,585 Deferred tax liability 18,445 8% serial bonds 83,300 Common stock, $10 par 107,100 Additional paid-in capital 178,500 Retained earnings—Appropriation for bonded indebtedness 71,400 Retained earnings—Unappropriated 45,220 $765,884 $765,884 An analysis of the Retained Earnings—Unappropriated account follows: Retained earnings unappropriated, December 31, 2020 $1,547,000 Add: Net income…
The comparative balance sheets for Swifty Corporation show the following information. December 31 2020 $33,500 2019 $12,900 Cash Accounts receivable 12,400 10,000 Inventory 12,100 9,000 Available-for-sale debt investments -0- 3,000 Buildings -0- 29,800 Equipment 44,800 19,900 Patents 5,000 6,300 $90,900 $107,800 Allowance for doubtful accounts $3,100 $4,500 Accumulated depreciation-equipment 2,000 4,500 Accumulated depreciation-building -0- 6,000 Accounts payable 5,000 3,000 Dividends payable Notes payable, short-term (nontrade) -0- 4,900 3,000 4,100 Long-term notes payable 31,000 25,000 Common stock 43,000 33,000 Retained earnings 20,700 $107,800 5,900 $90,900 Additional data related to 2020 are as follows. Equipment that had cost $11,000 and was 40% depreciated at time of disposal was sold for $2,500. $10,000 of the long-term note payable was paid by issuing common stock. Cash dividends paid were $4,900. On January 1, 2020, the building was completely destroyed by a flood. Insurance…
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The Murdock Corporation reported the following balance sheet data for 2024 and 2023: 2024 2023 Cash $ 98,465 $ 34,355 Available-for-sale debt securities (not cash equivalents) 25,000 104,000 Accounts receivable 99,000 85,350 Inventory 184,000 162,100 Prepaid insurance 3,210 3,900 Land, buildings, and equipment 1,288,000 1,144,000 Accumulated depreciation (629,000) (591,000) Total assets $ 1,068,675 $ 942,705 Accounts payable $ 93,440 $ 167,670 Salaries payable 27,600 34,000 Notes payable (current) 42,100 94,000 Bonds payable 219,000 0 Common stock 300,000 300,000 Retained earnings 386,535 347,035 Total liabilities and shareholders' equity $ 1,068,675 $ 942,705 Additional information for 2024: (1) Sold available-for-sale debt securities costing $79,000 for $85,400. (2) Equipment costing $20,000 with a book value of $6,900 was sold for $8,850. (3) Issued 6% bonds payable at face value, $219,000. (4) Purchased new equipment for $164,000 cash. (5)…
As of December 31, 2020, Casablanca Corporation reported the following items in its balance sheet: Cash P240,000 ; Receivables P520,000 Inventory P350,000; Property and Plant P3,000,000; Equipment P850,000; Accounts payables P400,000; short-term notes payables P500,000; long-term debt P1,000,000; Weighted average of outstanding share in 2020- 250,000. Casablanca Corp. contracted with a third party appraiser to determine how much is the replacement cost of its assets. Based on the report of the appraiser, the property and plant has replacement cost of 125% of its reported value. On the other hand, the equipment only commands replacement cost of 70% of its value. According to the appraiser, the equipment was designed using an old technology thus the lower replacement cost. Other assets and liabilities are valued fairly.---- How much is the none-current asset reflected in the books of Casablanca Corporation as of December 31, 2020? how much is the book value per share of Casablanca…
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