On January 1, 2024, the Moody Company entered into a transaction for 100% of the outstanding common stock of Osorio Company. To acquire these shares, Moody issued $400 in long- term liabilities and also issued 40 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Moody paid $20 to lawyers, accountants, and brokers for assistance in bringing about this acquisition. Another $15 was paid in connection with stock issuance costs. Prior to these transactions, the balance sheets for the two companies were as follows:
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- On January 1, 2024, the Moody Company entered into a transaction for 100% of the outstanding common stock of Osorio Company. To acquire these shares, Moody issued $400 in long- term liabilities and also issued 40 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Moody paid $20 to lawyers, accountants, and brokers for assistance in bringing about this acquisition. Another $15 was paid in connection with stock issuance costs. Prior to these transactions, the balance sheets for the two companies were as follows: Cash Receivables Inventories Land Buildings (net) Equipment (net) Accounts payable Long-term liabilities. Common stock ($1 par) Common stock ($20 par) Additional paid-in capital Retained earnings Note: Parentheses indicate a credit balance. Multiple Choice O $1,760 In Moody's appraisal of Osorio, three assets were deemed to be undervalued on the subsidiary's books: Inventory by $10, Land by $40, and Buildings by $60. Compute the amount of…On January 1, 2018, the Moody Company entered into a transaction for 100% of the outstanding common stock of Osorio Company. To acquire these shares, Moody issued $400 in long-term liabilities and also issued 40 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Moody paid $20 to lawyers, accountants, and brokers for assistance in bringing about this acquisition. Another $15 was paid in connection with stock issuance costs. Prior to these transactions, the balance sheets for the two companies were as follows: Moody Osorio Cash $ 180 $ 40 Receivables 810 180 Inventories 1,080 280 Land 600 360 Buildings (net) 1,260 440 Equipment (net) 480 100 Accounts payable (450 ) (80 ) Long-term liabilities (1,290 ) (400 ) Common stock ($1 par) (330 ) Common stock ($20 par) (240 ) Additional paid-in capital (1,080 ) (340 ) Retained…On January 1, 2021, the Moody Company entered into a transaction for 100% of the outstanding common stock of Osorio Company. To acquire these shares, Moody issued $400 in long-term liabilities and also issued 40 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Moody paid $20 to lawyers, accountants, and brokers for assistance in bringing about this acquisition. Another $15 was paid in connection with stock issuance costs. Prior to these transactions, the balance sheets for the two companies were as follows: Moody Osorio Cash $ 180 $ 40 Receivables 810 180 Inventories 1,080 280 Land 600 360 Buildings (net) 1,260 440 Equipment (net) 480 100 Accounts payable (450 ) (80 ) Long-term liabilities (1,290 ) (400 ) Common stock ($1 par) (330 ) Common stock ($20 par) (240 ) Additional paid-in capital (1,080 ) (340 ) Retained…
- On January 1, 2024, Presidio Company acquired 100 percent of the outstanding common stock of Mason Company. To acquire these shares, Presidio issued to the owners of Mason $310,000 in long-term liabilities and 20,000 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Presidio paid $24,000 to accountants, lawyers, and brokers for assistance in the acquisition and another $9,000 in connection with stock issuance costs. Prior to these transactions, the balance sheets for the two companies were as follows: Items Presidio Company Cash Receivables $ 75,000 354,000 Mason Company $ 38,800 90,000 Inventory Land 380,000 229,000 246,000 253,000 Buildings (net) 476,000 274,000 Equipment (net) 174,000 50,400 Accounts payable Long-term liabilities Common stock-$1 par value (241,000) (41,400) (480,000) (310,000) (110,000) 0 Common stock-$20 par value Additional paid-in capital Retained earnings, 1/1/24 0 (120,000) (360,000) (514,000) 0 (463,800) Note:…On January 1, 2024, Presidio Company acquired 100 percent of the outstanding common stock of Mason Company. To acquire these shares, Presidio issued to the owners of Mason $273,000 in long-term liabilities and 20,000 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Presidio paid $21,000 to accountants, lawyers, and brokers for assistance in the acquisition and another $6,000 in connection with stock issuance costs. Prior to these transactions, the balance sheets for the two companies were as follows: Cash Items Presidio Company $ 62,100 $ 38,400 344,000 386,000 276,000 170,000 150,000 222,000 233,000 58,500 (66,300) 441,000 11 205,000 (192,000) (507,000) (273,000) (110,000) 0 (120,000) (360,000) (545,100) (412,600) Mason Company Receivables Inventory Land Buildings (net) Equipment (net) Accounts payable Long-term liabilities Common stock-$1 par value Common stock-$20 par value Additional paid-in capital Retained earnings, 1/1/24 Note:…On January 1, 2024, Presidio Company acquired 100 percent of the outstanding common stock of Mason Company. To acquire these shares, Presidio issued to the owners of Mason $306,000 in long-term liabilities and 20,000 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Presidio paid $27,500 to accountants, lawyers, and brokers for assistance in the acquisition and another $12,500 in connection with stock issuance costs. Prior to these transactions, the balance sheets for the two companies were as follows: Presidio Company $ 66,600 362,000 362,000 213,000 515,000 Cash Items Receivables Inventory Land Buildings (net) Equipment (net) Accounts payable Long-term liabilities 168,000 (193,000) (454,000) (110,000) Common stock-$1 par value Common stock-$20 par value Additional paid-in capital Retained earnings, 1/1/24 Note: Parentheses indicate a credit balance. 0 (360,000) (569,600) Mason Company $ 28,800 166,000 206,000 184,000 292,000 74,100 (61,800)…
- On January 1, 2024, Presidio Company acquired 100 percent of the outstanding common stock of Mason Company. To acquire these shares, Presidio issued to the owners of Mason $283,000 in long-term liabilities and 20,000 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Presidio paid $20,500 to accountants, lawyers, and brokers for assistance in the acquisition and another $5,500 in connection with stock issuance costs. Prior to these transactions, the balance sheets for the two companies were as follows: Presidio Company $ 84,600 326,000 387,000 Items Cash Receivables Inventory Land Buildings (net) Equipment (net) Accounts payable Long-term liabilities Common stock-$1 par value on stock-$20 par value Additional paid-in capital Retained earnings, 1/1/24 218,000 463,000 253,000 (152,000) (433,000) (110,000) (360,000) (676,600) Mason Company $ 32,400 133,000 169,000 230,000 271,000 50,400 (45,600) (283,000) 0 (120,000) (437,200) 0 Note: Parentheses…On January 1, 2022, Cullumber Corp. bought 31,000 shares of the available 100,000 common shares of Iceberg Inc., a publicly traded firm. This acquisition provided Cullumber with significant influence. Cullumber paid $719,000 cash for the investment. At the time of the acquisition, Iceberg reported assets of $2,507,000 and liabilities of $1,215,000. Asset values reflected fair market value, except for capital assets that had a net book value of $502,000 and a fair market value of $747,000. These assets had a remaining useful life of five years. For 2022 Iceberg reported net income of $409,000 and paid total cash dividends of $100,000. On May 16, 2023, Cullumber sold 15,500 of its shares in Iceberg for $425,000. Cullumber has no immediate plans to sell its remaining investment in Iceberg. Iceberg is actively traded, and stock price information follows: January 1, 2022 $29 December 31, 2022 $31 January 1, 2023 $32 Assuming Cullumber is using the equity method under ASPE, did the initial…On January 1, 2022, Oriole Corp. bought 28,000 shares of the available 100,000 common shares of Iceberg Inc., a publicly traded firm. This acquisition provided Oriole with significant influence. Oriole paid $722,000 cash for the investment. At the time of the acquisition, Iceberg reported assets of $2,493,000 and liabilities of $1,192,000. Asset values reflected fair market value, except for capital assets that had a net book value of $505,000 and a fair market value of $753,000. These assets had a remaining useful life of five years. For 2022 Iceberg reported net income of $390,000 and paid total cash dividends of $100,000. On May 16, 2023, Oriole sold 14,000 of its shares in Iceberg for $425,000. Oriole has no immediate plans to sell its remaining investment in Iceberg. Iceberg is actively traded, and stock price information follows: January 1, 2022 $29 December 31, 2022 $31 January 1, 2023 $32 (a) Assuming Oriole is using the equity method under ASPE. did the initial investment…
- On January 1, 2023, Fisher Corporation purchased 40 percent (80,000 shares) of the common stock of Bowden, Incorporated, for $978,000 in cash and began to use the equity method for the investment. The price paid represented a $66,000 payment in excess of the book value of Fisher's share of Bowden's underlying net assets. Fisher was willing to make this extra payment because of a recently developed patent held by Bowden with a 15-year remaining life. All other assets were considered appropriately valued on Bowden's books. Bowden declares and pays a $104,000 cash dividend to its stockholders each year on September 15. Bowden reported net income of $408,000 in 2023 and $358,000 in 2024. Each income figure was earned evenly throughout its respective years. On July 1, 2024, Fisher sold 10 percent (20,000 shares) of Bowden's outstanding shares for $340,000 in cash. Although it sold this interest, Fisher maintained the ability to significantly influence Bowden's decision-making process.…On January 1, 2023, Fisher Corporation purchased 40 percent (70,000 shares) of the common stock of Bowden, Incorporated, for $974,000 in cash and began to use the equity method for the investment. The price paid represented a $60,000 payment in excess of the book value of Fisher's share of Bowden's underlying net assets. Fisher was willing to make this extra payment because of a recently developed patent held by Bowden with a 15-year remaining life. All other assets were considered appropriately valued on Bowden's books. Bowden declares and pays a $102,000 cash dividend to its stockholders each year on September 15. Bowden reported net income of $390,000 in 2023 and $342,000 in 2024. Each income figure was earned evenly throughout its respective years. On July 1, 2024, Fisher sold 10 percent (17,500 shares) of Bowden's outstanding shares for $332,000 in cash. Although it sold this interest, Fisher maintained the ability to significantly influence Bowden's decision-making process.…On August 31, 2019, Wood Corp. issued 100,000 shares of its $20 par value common stock for the net assets of Pine Inc. in a business combination accounted for by the acquisition method. The market value of Wood's common stock on August 31 was $36 per share. Wood paid a fee of $160,000 to the consultant who arranged this acquisition. Costs of registering and issuing the equity securities amounted to $80,000. No goodwill was involved in the purchase. What amount should Wood capitalize as the cost of acquiring Pine's net assets? Select one: a. 3,600,000 b. 3,760,000 c. 3,840,000 d. 3,680,000