Sp1 On April 1, 2021, Chase Supplypurchased Sparky Electric Co. for$225,000 Sparky Electric Company'sbalance sheet at date of acquistion:Current assets 100,000 Noncurrentassets 280,000 Total assets 380,000Current Liabilties 30,000 Long termliabilities 150,000 Stockholders' equity200,000 Total Liabilities andStockholders' equity 380,000 Fair valueof selected assets of Sparky Electric atthe date of purchase were as follows:Current assets 102,000 Noncurrentassets 260,000 Long term liabilities140,000Compute the amount of goodwillrecognized by Chase Supply on thedate of purchase. and prepare thejournal entry for the acquistion.Referring to the information in Problem 2....Over the next 4 months of operations, the Sparky Division experienced significantoperating losses. It is expected that these losses will continue for the foreseeable future.At December 31, 2021, Sparky Division reports the following balance sheet information:Current assetsNoncurrent assets (including goodwill of 33,000)Current LiabiltiesLong term liabilitiesNET ASSETSIt is determined that the fair value of the Sparky Division is nowDetemine the amount of the impairment loss, if any, to be recorded on December 31,2021 and prepare the journal entry (if any).260,000135,00098,000(50,000)(160,000)148,000

Answered: Image /qna-images/answer/25f0dd32-0ac1-4317-b7ed-99cf10f32c16.jpg

On April 1, 2021, Chase Supply purchased Sparky Electric Co. for $225,000 Sparky Electric Company's balance sheet at date of acquistion: Current assets 100,000 Noncurrent assets 280,000 Total assets 380,000 Current Liabilties 30,000 Long term liabilities 150,000 Stockholders' equity 200,000 Total Liabilities and Stockholders' equity 380,000 Fair value of selected assets of Sparky Electric at the date of purchase were as follows: Current assets 102,000 Noncurrent assets 260,000 Long term liabilities 140,000 Compute the amount of goodwill recognized by Chase Supply on the date of purchase. and prepare the journal entry for the acquistion.

On April 1, 2021, Chase Supply purchased Sparky Electric Co. for $225,000 Sparky Electric Company's balance sheet at date of acquistion: Current assets 100,000 Noncurrent assets 280,000 Total assets 380,000 Current Liabilties 30,000 Long term liabilities 150,000 Stockholders' equity 200,000 Total Liabilities and Stockholders' equity 380,000 Fair value of selected assets of Sparky Electric at the date of purchase were as follows: Current assets 102,000 Noncurrent assets 260,000 Long term liabilities 140,000 Compute the amount of goodwill recognized by Chase Supply on the date of purchase. and prepare the journal entry for the acquistion.

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

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 8MC

See similar textbooks

Similar questions

During 2021, Anthony Company purchased debt securities as a long-term investment and classified them as trading. All securities were purchased at par value. Pertinent data are as follows: The net holding gain or loss included in Anthonys income statement for the year should be: a. 0 b. 3,000 gain c. 9,000 loss d. 12,000 loss
On January 1, 2021, ABC acquired all the assets and assumed all the liabilities of DEF Co. for P4,500,000. Relevant information follows: ASSETS Carrying Value 55,000 800,000 Fair Values 55,C00 Cash Receivable 800,C00 150,000 700,000 3,500,000 150,000 1,555,000 180,C00 750,C00 4,000,C00 200,C00 1,555,0000 Allowance for Doubtful Accounts Inventory Land Goodwill Liabilities DEC Co. has research and development projects with fair value of P100,000. ABC does not intend to use those R&Ds. However, there have been exchange transactions involving the information generated from DEF, but those transactions are infrequent > All fair value adjustments result to temporary differences but do not affect the tax bases of the assets and liabilities. The taxrate is 30%. > ABC incurred P200,000 on general administrative costs of maintaining an internal acquisition department. Compute the goodwill (gain on bargain purchase)?
On January 1, 2021, P Corporation purchases from an unrelated person all the outstanding stock of S Corporation for $90,000. S's balance sheet on the purchase date is as follows: Basis Fair Market Value Assets Cash $ 5,000 $ 5,000 Accounts Receivable 20,000 20,000 Inventory (LIFO) 20,000 40,000 Equipment (accumulated depreciation of $10,000) 30,000 45,000 Total Assets $75,000 $110,000 Liabilities Accounts payable $20,000 $ 20,000 Equity 55,000 90,000 Total liabilities and equity $75,000 $110,000 P properly elects § 338. S's tax rate is 21 percent. a. What is the aggregate basis of S's assets after this transaction? b. What is the basis for each individual asset?
On January 1, 2021, P Corporation purchases from an unrelated person all the outstanding stock of S Corporation for $90,000. S’s balance sheet on the purchase date is as follows: Assets Basis Fair Market Value Cash $ 5,000 $ 5,000 Accounts Receivable 20,000 20,000 Inventory (LIFO) 20,000 40,000 Equipment (accumulated depreciation of $10,000) 30,000 45,000 Total Assets $75,000 $110,000 Liabilities Accounts payable $20,000 $ 20,000 Equity 55,000 90,000 Total liabilities and equity $75,000 $110,000 P properly elects § 338. S’s tax rate is 21 percent. a. What is the aggregate basis of S’s assets after this transaction? b. What is the basis for each individual asset?
At December 31, 2019, Velasco Corporation had the following investments: Investment in debt securities, due 3/31/20 (purchased 12/31/19) P600,000 Investment in debt securities, due 1/31/20 (purchased 1/1/19) 900,000 Investment in ordinary shares acquired on 12/1/19 which are intended for short-term profit purposes. The company intends to sell the same by 2/28/20. 400,000 Investment in ordinary shares acquired on 12/31/18 which the client is intending to hold as available-for-sale. 300,000 Investment in preference shares acquired on 12/1/19 redeemable at the option of the issuer by 2/28/20. 300.000 90-day certificate of deposit, due 2/28/20 (acquired on 12/10/19) 500,000 180-day certificate of deposit, due 3/15/20 (acquired on 9/16/19) 800,000 Velasco Corporation should report cash equivalents in its December 31, 2019 statement of financial position at
During 2021, Lavida Loca Company purchased trading securities with the following cost and market value on December 31, 2021. Cost Market value A 300,000 400,000 B 1,500,000 1,700,000 C 3,800,000 3,900,000 The entity sold Investment C on January 10, 2022 for P 4,000,000 What is the unrealized gain or loss should be reported in the income statement for 2021? a. 100,000 gain b, 100,000 loss c. 400,000 gain d. 400,000 loss
At December 31, 2021, Hull-Meyers Corp. had the following investments that were purchased during 2021, its first year of operations: Amortized cost Fair Value Trading Securities: Security A $ 980,000 $ 993,000 Security B 185,000 180,200 Totals $ 1,165,000 $ 1,173,200 Securities Available-for-Sale: Security C $ 780,000 $ 852,000 Security D 980,000 998,200 Totals $ 1,760,000 $ 1,850,200 Securities to Be Held-to-Maturity: Security E $ 570,000 $ 581,600 Security F 695,000 689,400 Totals $ 1,265,000 $ 1,271,000 No investments were sold during 2021. All securities except Security D and Security F are considered short-term investments. None of the fair value changes is considered permanent. Required:Complete the following table. (Amounts to be deducted should be indicated with a minus sign.)
At December 31, 2021, Hull-Meyers Corp. had the following investments that were purchased during 2021, its first year of operations: Amortized cost Fair Value Trading Securities: Security A $ 940,000 $ 954,000 Security B 145,000 139,200 Totals $ 1,085,000 $ 1,093,200 Securities Available-for-Sale: Security C $ 740,000 $ 816,000 Security D 940,000 956,600 Totals $ 1,680,000 $ 1,772,600 Securities to Be Held-to-Maturity: Security E $ 530,000 $ 540,800 Security F 655,000 649,200 Totals $ 1,185,000 $ 1,190,000 No investments were sold during 2021. All securities except Security D and Security F are considered short-term investments. None of the fair value changes is considered permanent. Complete the following table. Reported on Balance Sheet as: Unrealized gain (loss) included in: Current assets Noncurrent assets Net Income…
On May 31, 2021, Ivanhoe Company paid $3,640,000 to acquire all of the common stock of Oriole Corporation, which became a division of Ivanhoe. Oriole reported the following balance sheet at the time of the acquisition: Current assets $ 936,000 Current liabilities $ 624,000 Noncurrent assets 2,808,000 Long-term liabilities 520,000 Stockholder's equity 2,600,000 Total assets $3,744,000 Total liabilities and stockholder's equity $3,744,000 It was determined at the date of the purchase that the fair value of the identifiable net assets of Oriole was $3,224,000. At December 31, 2021, Oriole reports the following balance sheet information: Current assets $ 832,000 Noncurrent assets (including goodwill recognized in purchase) 2,496,000 Current liabilities (728,000 ) Long-term liabilities (520,000 ) Net assets $2,080,000 It is determined that the fair value of the Oriole division is $2,288,000. 1).…
On May 31, 2021, Oriole Company paid $3,675,000 to acquire all of the common stock of Pharoah Corporation, which became a division of Oriole. Pharoah reported the following balance sheet at the time of the acquisition: Current assets $ 945,000 Current liabilities $ 630,000 Noncurrent assets 2,835,000 Long-term liabilities 525,000 Stockholder's equity 2,625,000 Total assets $3,780,000 Total liabilities and stockholder's equity $3,780,000 It was determined at the date of the purchase that the fair value of the identifiable net assets of Pharoah was $3,255,000. At December 31, 2021, Pharoah reports the following balance sheet information: Current assets $ 840,000 Noncurrent assets (including goodwill recognized in purchase) 2,520,000 Current liabilities (735,000 ) Long-term liabilities (525,000 ) Net assets $2,100,000 It is determined that the fair value of the Pharoah division is $2,310,000.…
Z Corporation has the following transactions relating to its investment during 2020: Jan 5 Acquired 16,000 shares of Y company for P1,500,000 paying an additional P10,000 for brokerage and P5,000 for commission. Feb 14 Received dividends from Y company declared January 10,2020 to the stockholders of records January 31,2020, P16,000. Required:prepare all the necessary entries assuming the investment is 1. Financial asset at Fair Value through profit and loss 2. Financial asset at Fair Value through other comprehensive income
At the end of 2018, Terry Company prepared the following schedule of investments in available-for-sale debt securities (all of which were acquired at par value): Company Amortized Cost 12/31/18 Fair Value Cumulative Change in Fair Value Morgan Company $35,000 $34,200 $(800) Nance Company 50,000 53,100 3,100 Totals $85,000 $87,300 $2,300 During 2019, the following transactions occurred: July 1 Purchased Oscar Company debt securities with a par value of 100,000 for $98,000. The securities carry an annual interest rate of 10%, mature on December 31, 2021, and pay interest seminannually on July 1 and December 31. Terry uses the straight-line method to amortize any discounts or premiums. Oct. 11 Sold all of the Morgan Company securities for $33,000 plus interest of $1,300. Dec. 31 Received interest of $6,000 on the Nance Company and Oscar Company debt securities, and the following yearend total market values were available: Nance Company debt securities, $55,000; Oscar…