On January 1, 2024, Whispering Winds Company acquired all the assets and assumed all the liabilities of Carla Vista Company and merged Carla Vista into Whispering Winds. In exchange for the net assets of Carla Vista, Whispering Winds gave its bonds payable with a maturity value of $560,000, a stated interest rate of 10%, interest payable semiannually on June 30 and December 31, a maturity date of January 1, 2034, and a yield rate of 12%. Balance sheets for Whispering Winds and Carla Vista (as well as fair value data) on January 1, 2024, were as follows: Cash Receivables Inventories Land Buildings Accumulated depreciation-buildings Equipment Accumulated depreciation-equipment Total assets Whispering Winds Book Value $253,430 370,350 798,320 644,730 932,090 (321,220) 240,040 (76,870) $2,840,870 Carla Vista Book Value $123,170 156,940 243,220 104,200 435,090 (162,040) 133,250 (90,840) $942,990 Fair Value $123,170 143,290 317,970 300,670 99,320 35,590 $1,020,010

On January 1, 2024, Whispering Winds Company acquired all the assets and assumed all the liabilities of Carla Vista Company and merged Carla Vista into Whispering Winds. In exchange for the net assets of Carla Vista, Whispering Winds gave its bonds payable with a maturity value of $560,000, a stated interest rate of 10%, interest payable semiannually on June 30 and December 31, a maturity date of January 1, 2034, and a yield rate of 12%. Balance sheets for Whispering Winds and Carla Vista (as well as fair value data) on January 1, 2024, were as follows: Cash Receivables Inventories Land Buildings Accumulated depreciation-buildings Equipment Accumulated depreciation-equipment Total assets Whispering Winds Book Value $253,430 370,350 798,320 644,730 932,090 (321,220) 240,040 (76,870) $2,840,870 Carla Vista Book Value $123,170 156,940 243,220 104,200 435,090 (162,040) 133,250 (90,840) $942,990 Fair Value $123,170 143,290 317,970 300,670 99,320 35,590 $1,020,010

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 1MC

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On January 1, 2024, Whispering Winds Company acquired all the assets and assumed all the liabilities of Carla Vista Company and merged Carla Vista into Whispering Winds. In exchange for the net assets of Carla Vista, Whispering Winds gave its bonds payable with a maturity value of $560,000, a stated interest rate of 10%, interest payable semiannually on June 30 and December 31, a maturity date of January 1, 2034, and a yield rate of 12%. Balance sheets for Whispering Winds and Carla Vista (as well as fair value data) on January 1, 2024, were as follows: Cash Receivables Inventories Land Buildings Accumulated depreciation-buildings Equipment Accumulated depreciation-equipment Total assets Current liabilities Bonds payable, 8% due 1/1/2034, Interest payable 6/30 and 12/31 Common stock, $15 par value Common stock, $5 par value Other contributed capital Retained earnings Total equities Whispering Winds Book Value $253,430 370,350 798,320 644,730 932,090 (321,220) 240,040 (76,870)…
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