On January 1, 2015, Pam Corporation made a significant acquisition, purchasing 75 percent of Sam Corporation's outstanding voting stock for a total of $4,200,000. Sam Corporation's stockholders' equity at that time was made up of the following components (all values in thousands): Capital stock with a par value of $10: $2,000 Additional paid-in capital: $1200 Retained earnings as of December 31, 2014: $1500 Total stockholders' equity: $4700 The surplus fair value of the net assets obtained from this acquisition was allocated as follows: 10 percent to underappreciated inventory (which was subsequently sold in 2015), 40 percent to underappreciated plant assets with a remaining useful life of eight years, and the remaining 50 percent to goodwill. Fast forward to December 31, 2019, and the comparative trial balances for both Pam Corporation and Sam Corporation as follows: Pam Other assets net $5,845 Sam $4500 Investment in Sam-75% 3,640 - Expenses (including cost of sales) 5,285 800 Dividends 600 300 $15370 $5600 Capital stock, $10 par $4,000 $2,000 Additional paid-in capital 850 1200 Retained earnings 2,670 1500 Sales 7380 900 Income from Sam 470 $15370 $5600

On January 1, 2015, Pam Corporation made a significant acquisition, purchasing 75 percent of Sam Corporation's outstanding voting stock for a total of $4,200,000. Sam Corporation's stockholders' equity at that time was made up of the following components (all values in thousands): Capital stock with a par value of $10: $2,000 Additional paid-in capital: $1200 Retained earnings as of December 31, 2014: $1500 Total stockholders' equity: $4700 The surplus fair value of the net assets obtained from this acquisition was allocated as follows: 10 percent to underappreciated inventory (which was subsequently sold in 2015), 40 percent to underappreciated plant assets with a remaining useful life of eight years, and the remaining 50 percent to goodwill. Fast forward to December 31, 2019, and the comparative trial balances for both Pam Corporation and Sam Corporation as follows: Pam Other assets net $5,845 Sam $4500 Investment in Sam-75% 3,640 - Expenses (including cost of sales) 5,285 800 Dividends 600 300 $15370 $5600 Capital stock, $10 par $4,000 $2,000 Additional paid-in capital 850 1200 Retained earnings 2,670 1500 Sales 7380 900 Income from Sam 470 $15370 $5600

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter15: Investments And Fair Value Accounting

Section: Chapter Questions

Problem 3PA

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On January 1, 2015, Pam Corporation made a significant acquisition, purchasing 75 percent of SamCorporation's outstanding voting stock for a total of $4,200,000. Sam Corporation's stockholders'equity at that time was made up of the following components (all values in thousands):Capital stock with a par value of $10: $2,000Additional paid-in capital: $1200Retained earnings as of December 31, 2014: $1500Total stockholders' equity: $4700The surplus fair value of the net assets obtained from this acquisition was allocated as follows: 10percent to underappreciated inventory (which was subsequently sold in 2015), 40 percent tounderappreciated plant assets with a remaining useful life of eight years, and the remaining 50 percentto goodwill.Fast forward to December 31, 2019, and the comparative trial balances for both Pam Corporation andSam Corporation as follows: Pam SamOther assets—net $5,845 $4500Investment in Sam—75% 3,640 —Expenses (including cost of sales) 5,285 800Dividends 600 300…
On January 1, 2015 ,Pub Corporation made a significant acquisition, purchasing 75 percent of SubCorporation's outstanding voting stock for a total of $4,200,000. Sub Corporation's stockholders'equity at that time was made up of the following components (all values in thousands):Capital stock with a par value of $10: $2,000Additional paid-in capital: $1200Retained earnings as of December 31, 2014: $1500Total stockholders' equity: $4700The surplus fair value of the net assets obtained from this acquisition was allocated as follows: 10percent to underappreciated inventory (which was subsequently sold in 2015), 40 percent tounderappreciated plant assets with a remaining useful life of eight years, and the remaining 50 percentto goodwill.Fast forward to December 31, 2019, and we have the comparative trial balances for both PubCorporation and Sub Corporation.…
On January 1, 2015, Pub Corporation made a significant acquisition, purchasing 75 percent of SubCorporation's outstanding voting stock for a total of $4,200,000. Sub Corporation's stockholders'equity at that time was made up of the following components (all values in thousands):Capital stock with a par value of $10: $2,000Additional paid-in capital: $1200Retained earnings as of December 31, 2014: $1500Total stockholders' equity: $4700The surplus fair value of the net assets obtained from this acquisition was allocated as follows: 10percent to underappreciated inventory (which was subsequently sold in 2015), 40 percent tounderappreciated plant assets with a remaining useful life of eight years, and the remaining 50 percentto goodwill.Fast forward to December 31, 2019, and we have the comparative trial balances for both PubCorporation and Sub Corporation. Pub SubOther assets—net $5,845 $4500Investment in Sub—75% 3,640 —Expenses (including cost of sales) 5,285 800Dividends 600 300 $15370…
On January 1, 2015, Pam Corporation made a significant acquisition, purchasing 75 percent of Sam Corporation's outstanding voting stock for a total of $4,200,000. Sam Corporation's stockholders' equity at that time was made up of the following components (all values in thousands): Capital stock with a par value of $10: $2,000 Additional paid-in capital: $1200 Retained earnings as of December 31, 2014: $1500 Total stockholders' equity: $4,700 The surplus fair value of the net assets obtained from this acquisition was allocated as follows: 10 percent to underappreciated inventory (which was subsequently sold in 2015), 40 percent to underappreciated plant assets with a remaining useful life of eight years, and the remaining 50 percent to goodwill. Fast forward to December 31, 2019, and the comparative trial balances for both Pam Corporation and Sam Corporation as follows: Determine the amounts that would appear in the consolidated financial statements of Pam Corporation and Sam for each…
On January 1, 2015 ,Pub Corporation made a significant acquisition, purchasing 75 percent of Sub Corporation's outstanding voting stock for a total of $4,200,000. Sub Corporation's stockholders'equity at that time was made up of the following components (all values in thousands):Capital stock with a par value of $10: $2,000Additional paid-in capital: $1200Retained earnings as of December 31, 2014: $1500Total stockholders' equity: $4700The surplus fair value of the net assets obtained from this acquisition was allocated as follows: 10percent to underappreciated inventory (which was subsequently sold in 2015), 40 percent tounderappreciated plant assets with a remaining useful life of eight years, and the remaining 50 percentto goodwill.Fast forward to December 31, 2019, and we have the comparative trial balances for both PubCorporation and Sub Corporation.…
prepare of the related journal entries. On 1 January 2017, FIBERBOATS acquired 100% of BELL Corporation. FIBERBOATS issued 50,000 shares of its BD0.600 par ordinary shares, with a market price of BD0.400 on the date the acquisition was announced and BD0.800 on the date the acquisition was completed, for all of BELL Corporation ordinary shares. The book value of net assets of BELL Corporation at the date of acquisition was BD10,000. On that date, the fair value of BELL Corporation assets and liabilities equalled their respective carrying amounts with the exception of property, plant and equipment (PPE) that exceeded its book value by BD120,000. The fair value of BELL’s identifiable intangibles (in-process research and development) is BD70,000. The in-process research and development will be amortized over 5 years.
On December 31, 2016, Akron, Inc. purchased 5 Percent of Zip’s Company's common shares on the open market in exchange for $16,000. On December 31, 2017, Akron, Inc., acquires an additional 25 percent of Zip Company's outstanding common stock for $95,000. During the next two years, the following information is available for Zip Company: Income Dividends Declared Common StockFair Value (12/31) 2016 $320,000 2017 $75,000 $7,000 380,000 2018 88,000 15,000 480,000 At December 31, 2017, Zip reports a net book value of $290,000. Akron attributed any excess of its 30 percent share of Zip's fair over book value to its share of Zip's franchise agreements. The franchise agreements had a remaining life of 10 years at December 31, 2017. Assume Akron applies the equity method to its Investment in Zip account: What amount of equity income should Akron report for 2018? On Akron's December 31, 2018, balance sheet, what amount is reported for the Investment in Zip…
On January 1, 2015, Port Company acquires 8,000 shares of Solvo Company by issuing 10,000 of its common stock shares with a par value of $10 per share and a fair value of $70 per share. The price paid reflects a control premium. The market value of the shares owned by the NCI is $80 per share. At the time of the purchase, Solvo has the following balance sheet:Appraisals indicate that book values are representative of fair values with the exception of the land and building. The land has a fair value of $180,000, and the building is appraised at $450,000. The building has an estimated remaining life of 20 years. Any remaining excess is goodwill.The following summary of Solvo’s retained earnings applies to 2015 and 2016:Balance, January 1, 2015. . . . . . . . . . . . . . . . . . . $250,000Net income for 2015. . . . . . . . . . . . . . . . . . . . . 60,000Dividends paid in 2015. . . . . . . . . . . . . . . . . . . (10,000)Balance, December 31, 2015 . . . . . . . . . . . . . . . $300,000Net…
Solution is based on GAAP standards
Aurum Services, Inc. acquired 100,000 shares of Gamma Metals, Inc. on January 1, 2017. Gamma pays a cash dividend of $0.25 per share on March 2, 2017. With the current investment, Aurum Services, Inc. holds 8% of Gamma. In the journal entry on March 2, 2017, _______. A Long-term Investments—Available-for-Sale is credited B Long-term Investments—Held-to-Maturity is debited C Long-term Investments—Available-for-Sale is debited D Dividend Revenue is credited
On 1/1/2022, Titanic Company purchased 56,000 ordinary shares from Tiny Company. This purchase accounts for 25% of Tiny Company’s ordinary shares outstanding. Tiny Company has the following transactions. Tiny’s stock price per share 1/1/2022 $12.00 31/12/2022 $15.60 31/12/2023 $10.80 Tiny's reported net income (loss) 31/12/2022 $1,612,800 31/12/2023 ($1,452,800) Tiny announced and paid cash dividend 28/1/2023 $322,560 Instruction Prepare journal entries for Titanic Company in the year 2022 and 2023.
AB Inc. acquired 100% stake in CD Inc. on January 1, 2013 by issuing 30,000 shares of common stock. The shares have a fair value of $15 per share. AB also paid $30,000 in stock issuance costs. Just before acquisition, AB had Common stock of $360,000 and Additional paid-in capital of 20,000. CD had Common stock of $80,000 and Additional paid- in capital of $40,000. Assuming both companies continue to operate separately, How much total capital that would appear in the consolidated Balance sheet at January 1, 2013? Select one: O a. $830,000 O b. $380,000 c. $800,000 O d. $950,000