Help Pacific Corp. has 200,000 shares of $4 par value stockoutstanding. Altitude Enterprises acquired 50,000 of Pacific'sshares on January 1, 2018, for $250,000, when Pacific's netassets had a total fair value of $600,000. On September 1,2021, Altitude agreed to buy an additional 100,000 shares ofPacific from a single stockholder for $8 per share. AlthoughPacific's shares were selling in the $7 range around September1, 2021, Altitude expected that gaining control of Pacific wouldgenerate significant revenue synergies, justifying thepremium price paid. If Pacific's net identifiable assets had afair value of $900,000 at September 1, 2021, how muchgoodwill should Altitude report in its post-combinationconsolidated balance sheet? a. $85,000 b. $120,000 c.$150,000 d. $600,000

Explanation of Goodwill:Goodwill is an intangible asset that arises when a company acquires another…

Answered: Pacific Corp. has 200,000 shares of $4…

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

Chapter16: Retained Earnings And Earnings Per Share

Section: Chapter Questions

Problem 13P

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Amie, Inc., has 153,000 shares of $2 par value stock outstanding. Prairie Corporation acquired 45,900 of Amie’s shares on January 1, 2018, for $183,600 when Amie’s net assets had a total fair value of $560,600. On July 1, 2021, Prairie bought an additional 91,800 shares of Amie from a single stockholder for $6 per share. Although Amie’s shares were selling in the $5 range around July 1, 2021, Prairie forecasted that obtaining control of Amie would produce significant revenue synergies to justify the premium price paid. If Amie’s identifiable net assets had a fair value of $775,800 at July 1, 2021, how much goodwill should Prairie report in its postcombination consolidated balance sheet?
Presented below are two independent situations. (1) Grand Cosmetics acquired 10% of the 200,000 ordinary shares of Cey Fashion at a total cost of $12 per share on March 18, 2020. On June 30, Cey declared and paid a $60,000 dividend. On December 31, Cey reported net income of $110,000 for the year. At December 31, the market price of Cey Fashion was $15 per share. The shares are classified as non-trading. (2) Unruh, Inc. obtained significant influence over Olsen Corporation by buying 25% of Olsen's 40,000 outstanding ordinary shares at a total cost of $7 per share on January 1. 2020. On June 15, Olsen declared and paid a cash dividend of $30,000. On December 31. Olsen reported a net income of SS0.000 for the year. Instructions Prepare all the necessary journal entries for 2020 for (a) Grand Cosmetics and (b) Unruh, Inc
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On April 15, 2023, Rizzo Inc. purchased 34,500 shares of Hernandez, Inc. for $22 per share (passive interest). During the year Rizzo Inc. sold 4,500 shares of Hernandez, Inc. for $25 per share. Rizzo Inc. started operations on January 1, 2023. At December 31, 2023 the market price of Hernandez, Inc.’s stock was $19 per share. What is the total amount of unrealized gain (loss) that Rizzo Inc. will report through its income statement for the year ended December 31, 2023 related to its investment in Hernandez, Inc. stock?
The following are independent situations. Situation 1: Conchita Cosmetics acquired 10% of the 200,000 shares of common stock of Martinez Fashion at a total cost of $13 per share on March 18, 2020. On June 30, Martinez declared and paid $75,000 cash dividends to all stockholders. On December 31, Martinez reported net income of $122,000 for the year. At December 31, the market price of Martinez Fashion was $15 per share. Situation 2: Monica, Inc. obtained significant influence over Seles Corporation by buying 30% of Seles's 30,000 outstanding shares of common stock at a total cost of $9 per share on January 1, 2020. On June 15, Seles declared and paid cash dividends of $36,000 to all stockholders. On December 31, Seles reported a net income of $85,000 for the year. Instructions Prepare all necessary journal entries in 2020 for both situations.
Panthers Corp. purchased 16,000 shares of Canes Corp. for $10 per share on April 1, 2022. As per IFRS 9, Panthers chose to classify this new investment as FVOCI at the time of the purchase. On November 1, 2022 Canes paid a dividend of $6 per share. At balance sheet date the market price of Canes was $9 per share. On March 1, 2023 Panthers sold all 16,000 shares for $15 per share. 1) Prepare the journal entries required under IFRS as well as those that would be required under GAAP.
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On January 18, 2020, Ehrlich Company purchased 40,000 shares (10%) of common stock of Portal Corporation as a long-term investment for $950,000. On March 26, 2020, Portal paid dividends of $0.30 per share. On July 19, 2020, Ehrlich sold 10,000 of its shares for $28 per share. On September 29,2020, Portal paid a dividend to shareholders of $0.50 per share. Instructions Prepare the journal entry to record the investment in Portal stock. Record the entry for the receipt of dividends on March 26, 2020 Record the sale of the shares on July 19, 2020 Record the receipt of dividends on September 29,2020 What is the balance of the Stock Investments account on Ehrlich Company's books at the end of the year?.
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…
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