Presented below are the financial balances for the BonGiovi Company and the TerensCompany as of December 31, 2017, immediately before BonGiovi acquired Terens. Also included are the fair values for Terens Company's net assets at that date (thousands of US$). BonGiovi BV31.12.2017 Terens BV 31.12.2017 Terens FV 31.12.2017Cash 870 240 240Receivables 660 600 600Inventory 1,230 420 580Land 1,800 260 250Buildings (Net) 1,800 540 650Equipment(net) 660 380 400Accounts Payable (570) (240) (240)Accrued expenses (270) (60) (60)Long term Liabilities (2,700) (1,020) (1,120)Common Stock ($20par) (1,980) -Common Stock ($5 par) - (420)Additional paid in capital (210) (180)Retained earnings (1,170) (480)Revenue (2,880) (660)Expenses 2,760 620Note: Parenthesis indicates a credit balanceAssume a business combination took place at December 31, 2017. BonGiovi issued 50 shares of its common stock with a fair value of $35 per share for all of the outstanding common shares of Terens. Stock issuance costs of $15 (in thousands) and direct costs of $10 (in thousands) were paid to effect this acquisition transaction. To settle a difference of opinion regarding Terens fair value, BonGiovi promises to pay an additional $5.2 (in thousands) to the former owners if Terens earnings exceed a certain sum during the next year. Given the probability of the required contingency payment and utilizing a 4% discount rate, the expected present value of the contingency is $5 (in thousands). Question 1Compute the investment to be recorded at the date of acquisition. A) $1,750. B) $1,755. C) $1,725. D) $1,760. E) $1,765. Question 2Compute consolidated inventory immediately following the acquisition. A) $1,650. B) $1,810. C) $1,230. D) $ 580. E) $1,830. Question 3Compute consolidated land immediately following the acquisition. A) $2,060. B) $1,800. C) $ 260.D) $2,050. E) $2,070. Question 4Compute consolidated buildings (net) immediately following the acquisition. A) $2,450. B) $2,340. C) $1,800. D) $ 650. E) $1,690. Question 5Compute consolidated goodwill immediately following the acquisition. A) $440. B) $442. C) $450. D) $455. E) $452. Question 6Compute consolidated equipment immediately following the acquisition. A) $ 400. B) $ 660. C) $1,060. D) $1,040. E) $1,050. Question 7Compute consolidated retained earnings as a result of this acquisition. A) $1,160. B) $1,170. C) $1,265. D) $1,280. E) $1,650. Question 8Compute consolidated revenues immediately following the acquisition. A) $3,540.B) $2,880. C) $1,170. D) $1,650. E) $4,050. Question 9Compute consolidated expenses immediately following the acquisition. A) $2,735.B) $2,760. C) $2,770. D) $2,785. E) $3,380. Question 10Compute the consolidated cash upon completion of the acquisition. A) $1,350. B) $1,110. C) $1,080. D) $1,085. E) $ 635
Presented below are the financial balances for the BonGiovi Company and the Terens
Company as of December 31, 2017, immediately before BonGiovi acquired Terens. Also
included are the fair values for Terens Company's net assets at that date (thousands of US$).
BonGiovi BV31.12.2017 Terens BV 31.12.2017 Terens FV 31.12.2017
Cash 870 240 240
Receivables 660 600 600
Inventory 1,230 420 580
Land 1,800 260 250
Buildings (Net) 1,800 540 650
Equipment(net) 660 380 400
Accounts Payable (570) (240) (240)
Accrued expenses (270) (60) (60)
Long term Liabilities (2,700) (1,020) (1,120)
Common Stock
($20par) (1,980) -
Common Stock ($5
par) - (420)
Additional paid in
capital (210) (180)
Revenue (2,880) (660)
Expenses 2,760 620
Note: Parenthesis indicates a credit balance
Assume a business combination took place at December 31, 2017. BonGiovi issued 50 shares
of its common stock with a fair value of $35 per share for all of the outstanding common
shares of Terens. Stock issuance costs of $15 (in thousands) and direct costs of $10 (in
thousands) were paid to effect this acquisition transaction. To settle a difference of opinion
regarding Terens fair value, BonGiovi promises to pay an additional $5.2 (in thousands) to the
former owners if Terens earnings exceed a certain sum during the next year. Given the
probability of the required contingency payment and utilizing a 4% discount rate, the expected
present value of the contingency is $5 (in thousands).
Question 1
Compute the investment to be recorded at the date of acquisition.
A) $1,750.
B) $1,755.
C) $1,725.
D) $1,760.
E) $1,765.
Question 2
Compute consolidated inventory immediately following the acquisition.
A) $1,650.
B) $1,810.
C) $1,230.
D) $ 580.
E) $1,830.
Question 3
Compute consolidated land immediately following the acquisition.
A) $2,060.
B) $1,800.
C) $ 260.
D) $2,050.
E) $2,070.
Question 4
Compute consolidated buildings (net) immediately following the acquisition.
A) $2,450.
B) $2,340.
C) $1,800.
D) $ 650.
E) $1,690.
Question 5
Compute consolidated
A) $440.
B) $442.
C) $450.
D) $455.
E) $452.
Question 6
Compute consolidated equipment immediately following the acquisition.
A) $ 400.
B) $ 660.
C) $1,060.
D) $1,040.
E) $1,050.
Question 7
Compute consolidated retained earnings as a result of this acquisition.
A) $1,160.
B) $1,170.
C) $1,265.
D) $1,280.
E) $1,650.
Question 8
Compute consolidated revenues immediately following the acquisition.
A) $3,540.
B) $2,880.
C) $1,170.
D) $1,650.
E) $4,050.
Question 9
Compute consolidated expenses immediately following the acquisition.
A) $2,735.
B) $2,760.
C) $2,770.
D) $2,785.
E) $3,380.
Question 10
Compute the consolidated cash upon completion of the acquisition.
A) $1,350.
B) $1,110.
C) $1,080.
D) $1,085.
E) $ 635
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