On December 31, Year 1,P Company purchased 80% of the outstanding shares of S Company for $7,840 cash. The statements of financial position of the two companies immediately after the acquisition transaction appear below. Plant of culpment (net) Investment in 5 Company Inventory Accounts receivable Cash Ordinary shares Retained earnings Long-term liabilities Other current liabilities Accounts payable P Company Carrying Amount $ 9,200 7,840 6,260 5,350 $ 32,350 $ 11,600 14,150 4,000 1,100 1,500 $ 32,350 s Company Carrying Amount $ 8,100 5,000 2,900 2,150 $ 18,150 $ 4,100 6,250 3,100 2,900 1,800 $ 18,150 Fair Value $ 6,000 5,600 2,900 2.150 3,100 1,800
On December 31, Year 1,P Company purchased 80% of the outstanding shares of S Company for $7,840 cash. The statements of financial position of the two companies immediately after the acquisition transaction appear below. Plant of culpment (net) Investment in 5 Company Inventory Accounts receivable Cash Ordinary shares Retained earnings Long-term liabilities Other current liabilities Accounts payable P Company Carrying Amount $ 9,200 7,840 6,260 5,350 $ 32,350 $ 11,600 14,150 4,000 1,100 1,500 $ 32,350 s Company Carrying Amount $ 8,100 5,000 2,900 2,150 $ 18,150 $ 4,100 6,250 3,100 2,900 1,800 $ 18,150 Fair Value $ 6,000 5,600 2,900 2.150 3,100 1,800
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Please do not give solution in image format ?.
Transcribed Image Text:(i) Fair value enterprise method
Assets
Liabilities
P Company
Consolidated Statement of financial position
December 31. Year 1
Total liabilities
Shareholders' equity
(b) Calculate the current ratio and debt-to-equity ratio for P Company under the identifiable net assets (INA) method and the fair value
enterprise (FVE) method. (Round "Current ratio" answers to 2 decimal places and "Debt to equity ratio" answers to 4 decimal
nieras!
Show Transcribed Text
Liabilities
Total abilities
holders' equity
Current ratio
Debt to equity ratio
INA
Ć
(b) Calculate the current ratio and debt-to-equity ratio for P Company under the identifiable net assets (INA) method and the fair valu
enterprise (FVE) method. (Round "Current ratio" answers to 2 decimal places and "Debt to equity ratio" answers to 4 decimal
places.)
FVE
A
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Transcribed Image Text:On December 31, Year 1, P Company purchased 80% of the outstanding shares of S Company for $7,840 cash.
The statements of financial position of the two companies immediately after the acquisition transaction appear below.
Plant alpment (net)
Invest in s Company
Inventory
Accounts receivable
Cash
Ordinary shares
Retained earnings
Long-term liabilities
1
Other current liabilities
Accounts payable
Assets
Show Transcribed Text
(a) Prepare a consolidated statement
of the following
(i) Identifiable net assets method
Liabilities
P Company
Consolidated Statement of financial position
December 31, Year 1
P Company
Carrying
Amount
$ 9,200
7,840
6,260
5,350
3,700
Total liabilities
Shareholders' equity
$32,350
$ 11,600
14,150
4,000
1,100
1,500
(ii) Fair value enterprise method
Required:
(o) Prepare a consolidated statement of financial position in order of liquidity ie starting with cash at the date of acquisition under each
of the following:
(i) Identifiable net assets method
5 Company
Carrying
Amount
$ 8,100
5,000
2,900
2,150
$ 18,150
3,100
2,900
1,800
$32,350 $ 18,150
P
4,100
6.250
P Company
Consolidated Statement of financial position
December 31, Year 1
$
Fair
Volue
$ 6,800
$
5,600
2,900
2,150
3,100
2,900
1,800
quidity le starting with cash at the date of acquisition under each
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