**Business Acquisition Analysis**On January 1, 2019, Company X acquired 80% of Company Y's common stock for $150,000. On the same day, Company Y's net assets amounted to $140,000. The fair value of assets and liabilities were equal on the acquisition date. For the year ending December 31, 2019, Company Y reported an income of $50,000 and declared a dividend of $30,000. Company X utilizes the equity method in accounting.**Question:**What is the goodwill balance on January 1, 2019?**Options:**- a. $10,000- b. $47,500- c. $37,500- d. $50,000**Explanation of Calculation:**To determine the goodwill, we follow these steps:1. **Calculate the fair value of the net assets acquired:** - Net assets of Company Y: $140,000 - Percentage acquired by Company X: 80% - Value of net assets acquired: 0.80 * $140,000 = $112,0002. **Determine the purchase consideration:** - Amount paid by Company X for 80% of Company Y: $150,0003. **Calculate the goodwill:** - Goodwill is the excess of the purchase consideration over the fair value of the net assets acquired. - Goodwill = Purchase consideration - Fair value of net assets acquired - Goodwill = $150,000 - $112,000 = $38,000However, none of the options provided exactly match the calculated goodwill amount of $38,000.**Interactive Question:**Please select the option closest to the calculated goodwill balance:- a. $10,000- b. $47,500- c. $37,500- d. $50,000**Answer:**The correct answer, based on the nearest value to the calculated goodwill of $38,000, is **c. $37,500.**

Goodwill = Purchase consideration - Fair value of net assets where, Purchase consideration = Amount…

on 1/1/2019 X CO acquired 80% of Y common stock for $150,000 in the same day the y net assets was $ 140,000 ,in the same date the fair value of assets and liabilities were equal .year ended 31/12/2019 y reported income $50,000 , declared dividend $30,000 ,X using equity methods what is good will balance on 1/1/2019 Select one: a. 10,000 b. 47,500 c. 37,500 d. 50,000

on 1/1/2019 X CO acquired 80% of Y common stock for $150,000 in the same day the y net assets was $ 140,000 ,in the same date the fair value of assets and liabilities were equal .year ended 31/12/2019 y reported income $50,000 , declared dividend $30,000 ,X using equity methods what is good will balance on 1/1/2019 Select one: a. 10,000 b. 47,500 c. 37,500 d. 50,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Munabhai Don't upload image please
1.
Plz solve for A ,B and C !!
Problem 11 Paul and Co. acquired a 90% interest in Shaq & Co. for $450,000 in cash on January 1, 2019. Paul & Co. uses the simple equity method: Assets: Current assets Depreciable assets, net $150,000 200,000 Current assets Depreciable Fixed assets Accumulated Depreciation Investment in Shaq & Co. Current liabilities Common Stock Retained Earnings 1/1/19 Sales Expenses Subsidiary Income Dividends Declared $350,000 The excess of the price paid over book value is attributable to Fixed ssets which have a value of $350,000, with the balance being Goodwill. The depreciable assets have a 10 year remaining life. Paul uses the simple equity method to record its nvestment in Shaq & Co. The following trial balances of the 2 companies are prepared on December 31, 2019: Paul Liabilities & Equity: Current liabilities Common Stock Retained Earnings 25,000 240,000 -96,000 486,000 -60,000 -250,000 -150,000 -1,400,000 1,250,000 -45,000 Shaq 130,000 200,000 -15,000 -100,000 -175,000 -700,000 650,000…
QUESTION 4 On 1 January 2018, Chelsea Ltd acquired 75% of the shares in Orlando Ltd at N$126 000. At that date, the balance on Orlando Ltd's retained earnings account amounted to N$36 000. The share capital amounted to N$120 000 and no shares have been issued since that date. The following are the condensed financial statements of Chelsea Ltd and subsidiary Orlando Ltd at 31 December 2020. STATEMENTS OF FINANCIAL POSITION AS AT 31 DECEMBER 2020 Chelsea Ltd Orlando Ltd N$ N$ ASSETS Property, plant and equipment 168 000 105 000 Investment in Orlando Ltd at fair value 180 000 Trade receivables 87 000 156 000 Total assets 435 000 261 000 EQUITY AND LIABILITIES Share capital 240 000 120 000 Mark-to-market reserve 54 000 Retained earnings Long-term borrowings Trade and other payables Total equity and liabilities 54 000 54 000 30 000 6 000 57 000 81 000 435 000 261 000
Question 30-32 The following are the balance sheets of Entity A and Entity B as of June 30, 2021: Entity A Current Assets 500 Noncurrent Assets 1,300 Capital Stock - 100 Shares 300 Retained Earnings 800 Current Liabilities 300 Non Current Liabilities 400 Entity B Current Assets 700 Noncurrent Assets 3,000 Capital Stock - 60 shares 600 Retained Earnings 1,400 Current Liabilities 600 Non Current Liabilities 1,100 On July 1, 2021, A acquired all issued shares of B giving in exchange 2.50 A shares for each ordinary shares of B in order for B to obtain public listing. The fair value of each ordinary share of B at July 1, is 40., while the quoted market price of A's ordinary shares is 16. The fair values of A's identifiable net assets at acquisition date are the same of their carrying amounts, except for noncurrent assets whose fair value was 1,500. On the other hand, the fair value of the net assets of B are approximately their carrying amounts. 30. Calculate the goodwill(excess) resulting…
BERGER PAINTS For the Year Ended December 31, 2019 Retained Earnings 1,000,000 Net Income 460,000 2 per share for 2019 dividend on 10,000 shares of preferred stock outstanding. 2 per share for 2018 dividend on 10,000 shares of preferred stock outstanding. 1 per share for 2019 dividend on 100,000 shares of common stock outstanding. Required: Prepare a statement of retained earnings for 2019.
Equity Investments Fair Value Method The following information is available for the Rosen Company as of December 31, year 1 regarding its investments. 4,200 shares of Grimes Company common stock 3,750 shares of Oliver Company common stock Total of portfolio Previous fair value adjustment balance Cost $43,900 23,750 $67,650 Requirements 1. Make an adjusting entry needed for December 31, year 1. Fair Value $44,275 21,995 66,270 1,650 2. During year 2, Rosen sold its investment in Oliver Company for $22,500. Make a journal entry to record the sale. 3. At the end of year 2, the Grimes Company shares had a fair value of $45,250. Make the adjusting entry needed for December 31, year 2.
PROBLEM 15 At the beginning of 2018, ESARiDe. Corporetion purchesed 406 of the ordinery shares outstanding of Mary Grece Incorporeted for P15,000.000 when the net assets of Mary Grece Incorporeted amounted to P30,000,000. At the acquisition dete, the carrying amounts of the identifieble assets and liebilities of Mary Grece Incorporeted were equel to their teir value, except for the following: Equipment whose air value was P7.000.000 greater than its carrying amount. b. Inventory whose tair velue wes P200.000 greeter then its carrying amount. a. The equipment hes a remaining lite of 4 years, and the inventory wes all sold during 2013. Mary Grace Incorporated has two classes of shares: Ordinary shares (par vale, P100). 300,000 shares outstanding 15% cumalative preference shares (gar valse, PS0). 100.00 shares outstanding The investee reported the following net income finclusive of enter-company transactions) and payment of cash dividend: 2018 2019 Net income 20,000,000 35,000,000…
Subject: AFAR #185
q1
Vikrambahi