Price Company acquired 75 percent of the common stock of Shandie Corporation on December 31,2013. On the date of acquisition, Price held land with a book value of $150,000 and a fair value of$300,000; Shandie held land with a book value of $100,000 and fair value of $500,000. What amountwould land be reported in the consolidated balance sheet prepared immediately after thecombination?Select one:OA. 375,000OB. 500,000OC. 650,000OD. 550,000

Step 1: Understand the Consolidation RulesIn a consolidation, the parent company reports 100% of the…

Answered: Price Company acquired 75 percent of…

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter12: Auditing Long-lived Assets And Merger And Acquisition Activity

Section: Chapter Questions

Problem 37RQSC

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On January 1, 2023, Flounder Corporation, a public company following IFRS, acquired 17,400 of the 58,000 outstanding common shares of Noah Corp. for $27 per share. Noah's statement of financial position reported the following information at the date of the acquisition: Assets not subject to depreciation $287,800 Assets subject to depreciation 863,600 Liabilities 148,600 Additional information: 1. On the acquisition date, the fair value is the same as the carrying amount for the assets that are not subject to depreciation and for the liabilities. 2. 3. 4. On the acquisition date, the fair value of the assets that are subject to depreciation is $957,600. These assets had a remaining useful life of eight years at that time. Noah reported 2023 net income of $94,000 and paid dividends of $4,500 in December 2023. Noah's shares are not actively traded on the stock exchange, but Flounder has determined that they have a fair value of $25 per share on December 31, 2023. (a) Prepare the journal…
On January 1, 2023, Novak Corporation, a public company following IFRS, acquired 15,900 of the 53,000 outstanding common shares of Noah Corp. for $22 per share. Noah's statement of financial position reported the following information at the date of the acquisition: Assets not subject to depreciation $289,800 Assets subject to depreciation 860,100 Liabilities 150,100 Additional information: 1. On the acquisition date, the fair value is the same as the carrying amount for the assets that are not subject to depreciation and for the liabilities. 2. 3. 4. On the acquisition date, the fair value of the assets that are subject to depreciation is $964,100. These assets had a remaining useful life of eight years at that time. Noah reported 2023 net income of $104,000 and paid dividends of $5,000 in December 2023. Noah's shares are not actively traded on the stock exchange, but Novak has determined that they have a fair value of $21 per share on December 31, 2023. (a) Your answer is partially…
On January 2, 2020, Waterway Company acquired 90% of the outstanding common stock of Oriole Company for $549,000 cash. Just before the acquisition, the balance sheets of the two companies were as follows: Cash Accounts Receivable (net) Inventory Plant and Equipment (net) Land Total Assets Accounts Payable Mortgage Payable Common Stock, $2 par value Other Contributed Capital Retained Earnings Total Equities Waterway $600,000 345,000 295,000 995,000 180,000 1,050,000 580,000 Oriole 303,000 $155,000 $2,415,000 74,000 $2,415,000 $770,000 168,000 $312,000 $134,000 170,000 275,000 98,000 115,000 210,000 60,000 251,000 $770,000 The fair values of Oriole's assets and liabilities are equal to their book values with the exception of land.
DEF company acquired the assets and assumed liabilities of GHI Company on January 1, 2022 by paying P3,000,000 and issuing its own ordinary shares. The comparison of the acquirer’s balance sheet before and after business combination transaction is as follows: Balance sheet before Acquisition Balance Sheet after Acquisition Total Assets 13,545,000 17,595,000 Total Liabilities 3,760,000 ? Total SHE 9,785,000 ? The fair value of the identifiable net asset of the acquiree is P4,835,000 and the book value of acquiree’s liabilities amounting to P1,300,000 is lower compared to its fair value by P350,000. DEF company paid acquisition related costs amounting to P50,000. What is the fair market value of the ordinary shares issued by the acquirer? a. 2,500,000 b. 2,400,000 c. 2,480,000 d. 2,450,000
On January 1, 2022, Pacer Corporation (Pacer) acquired 80% of Sprint Ltd. (Sprint) Corp. for $500,000. Please uses the cost method to account for its investment. On January 1, 2022, Sprint's retained earnings and common shares were $350,000 and $110,000, respectively. Sprint's book values did not differ materially from its fair values on the date of acquisition with the following exceptions: • Inventory had a fair value that was $20,000 higher than its book value. This inventory was sold to outsiders during 2022. • A patent (which had not previously been accounted for) was identified on the acquisition date with an estimated fair value of $15,000. The patent had an estimated useful life of 3 years. The financial statements of Pacer and Sprint for the year ended December 31, 2023 are shown below: Income Statements Pacer Corporation Sprint Ltd. Sales $500,000 $300,000 Other revenues 300,000 120,000 Less: expenses Cost of goods sold 400,000 240,000 Depreciation/amortization…
1. On January 1, 2018, P Co. acquired 80 percent of S Co. for $400,000 cash. On the date of acquisition, S reported common stock outstanding of $350,000 and retained earnings of $70,000. It held land with a book value of $180,000 and a market value of $210,000, and equipment with a book value of $80,000 and a market value of $98,000 at the date of combination. All depreciable assets held by S at the date of acquisition had a remaining economic life of eight years. S reported net income of $20,000 and dividends of $3,000 for 2019. Goodwill is not impaired since acquisition. P uses the equity method in accounting for its Investment in S. a) Provide the journal entries recorded by P on 12/31/ 2019 on its books to account for its investment in S b) Provide all consolidation entries needed on 12/31/ 2019
On January 1, 2022, Monica Company acquired 70 percent of Young Company's outstanding common stock for $658,000. The fair value of the noncontrolling interest at the acquisition date was $282,000. Young reported stockholders equity accounts on that date as follows: Common stock-$10 par value Additional paid-in capital Retained earnings In establishing the acquisition value, Monica appraised Young's assets and ascertained that the accounting records undervalued a building (with a five-year remaining life) by $40,000. Any remaining excess acquisition-date fair value was allocated to a franchise agreement to be amortized over 10 years. During the subsequent years, Young sold Monica inventory at a 30 percent gross profit rate. Monica consistently resold this merchandise in the year of acquisition or in the period immediately following. Transfers for the three years after this business combination was created amounted to the following: Year 2022 2023 2024 Transfer Price $ 300,000 40,000…
On January 1, 2018, Johnsonville Enterprises, Inc., acquired 80 percent of Stayer Company’s outstanding common shares in exchange for $3,000,000 cash. The price paid for the 80 percent ownership interest was proportionately representative of the fair value of all of Stayer’s shares.At acquisition date, Stayer’s books showed assets of $4,200,000 and liabilities of $1,600,000. The recorded assets and liabilities had fair values equal to their individual book values except that a building (10-year remaining life) with book value of $195,000 had an appraised fair value of $345,000. Stayer’s books showed a $175,500 carrying amount for this building at the end of 2018.Also, at acquisition date Stayer possessed unrecorded technology processes (zero book value) with an estimated fair value of $1,000,000 and a 20-year remaining life. For 2018 Johnsonville reported net income of $650,000 (before recognition of Stayer’s income), and Stayer separately reported earnings of $350,000. During 2018,…
On January 2, 2021, ABC Co. acquired 80% of XYZ Co. ordinary shares for P810,000. An amount of P37,500 of the excess is attributable to goodwill and the balance to a depreciable assets with an economic life of ten years. NCI is measured at fair value on the date of acquisition. On the date of acquisition, shareholder's equity accounts of the two entities were as follows: АВС Ordinary Shares - 1,312,500 Retained Earnings - 1,950,000 XYZ Ordinary Shares - 300,000 Retained Earnings - 525,000 On December 31, 2021, XYZ reported net income of 131,250 and paid dividends of P172,500. Goodwill have been impaired and should be reported at P7,500 on December 31, 2021. #6. What is the non-controlling interest in profit of XYZ on December 31, 2021? Select the correct response: 26,250.00 17,250.00 23,250.00 23,437.50
On January 1, 2018, Johnsonville Enterprises, Inc., acquired 80 percent of Stayer Company’s oustanding common shares in exchange for $3,000,000 cash. The price paid for the 80 percent ownership interest was proportionately representative of the fair value of all of Stayer’s shares.At acquisition date, Stayer’s books showed assets of $4,200,000 and liabilities of $1,600,000. The recorded assets and liabilities had fair values equal to their individual book values except that a building (10-year remaining life) with book value of $195,000 had an appraised fair value of $345,000. Stayer’s books showed a $175,500 carrying amount for this building at the end of 2018.Also, at acquisition date Stayer possessed unrecorded technology processes (zero book value) with an estimated fair value of $1,000,000 and a 20-year remaining life. For 2018 Johnsonville reported net income of $650,000 (before recognition of Stayer’s income), and Stayer separately reported earnings of $350,000. During 2018,…
Boulder, Inc., obtained 90 percent of Rock Corporation on January 1, 2016. Annual amortization of $22,000 is applicable on the allocations of Rock’s acquisition-date business fair value. On January 1, 2017, Rock acquired 75 percent of Stone Company’s voting stock. Excess business fair-value amortization on this second acquisition amounted to $8,000 per year. For 2018, each of the three companies reported the following information accumulated by its separate accounting system. Separate operating income figures do not include any investment or dividend income. Seperate operating income Dividends Declared Boulder $245000 $120000 Rock 85000 28000 Stone 150000 42000 a. What is consolidated net income for 2018?b. How is consolidated net income distributed to the controlling and noncontrolling interests?
Allison Corporation acquired all of the outstanding voting stock of Mathias, Inc., on January 1, 2017, in exchange for $5,875,000 in cash. Allison intends to maintain Mathias as a wholly owned subsidiary. Both companies have December 31 fiscal year-ends. At the acquisition date, Mathias’s stockholders’ equity was $2,000,000 including retained earnings of $1,500,000. At the acquisition date, Allison prepared the following fair value allocation schedule for its newly acquired subsidiary Post-acquisition, Allison employs the equity method to account for its investment in Mathias. During the two years following the business combination, Mathias reports the following income and dividends: Year Income Dividends 2020 480,000 25,000 2021 960,000 50,000 No asset impairments have occurred since the acquisition date. Individual financial statements for each company as of December 31, 2018, appear below. Parentheses indicate credit balances. Dividends declared were paid in the same…

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