Q.1 On January 1, 2019, Rami Corporation purchased 25% of the outstanding common stock of SawsanCorporation for $100,000 cash. Book value and fair value of Sawsan's assets and liabilities at the time ofacquisition are shown below.AssetsBookFairValuesValuesCash$40,000$40,000Accounts receivable100,00090,000Inventories40,000180,000$360.00050,000210,000Equipment$390,000Liabilities & EquitiesAccounts payableNote payableCapital stockRetained earnings$110,000$110,00050,00040,000100,000100,000$360.000$150.000Required:Prepare an allocation schedule for Rami's investment in Sawsan.

Allocation journal entries fall into four basic categories: fixed dollar allocations, fixed…

Q.1 On January 1, 2019, Rami Corporation purchased 25% of the outstanding common stock of Sawsan Corporation for $100,000 cash. Book value and fair value of Sawsan's assets and liabilities at the time of acquisition are shown below. Assets Вook Fair Values S40,000 Values $40,000 90,000 Cash Accounts receivable 100,000 Inventories 40,000 180,000 50,000 210,000 $390,000 Equipment S360.000 Liabilities & Equities Accounts payable Note payable Capital stock Retained earnings $110,000 $110,000 40,000 50,000 100,000 100,000 $360.000 $150.000 Required: Prepare an allocation schedule for Rami's investment in Sawsan.

Q.1 On January 1, 2019, Rami Corporation purchased 25% of the outstanding common stock of Sawsan Corporation for $100,000 cash. Book value and fair value of Sawsan's assets and liabilities at the time of acquisition are shown below. Assets Вook Fair Values S40,000 Values $40,000 90,000 Cash Accounts receivable 100,000 Inventories 40,000 180,000 50,000 210,000 $390,000 Equipment S360.000 Liabilities & Equities Accounts payable Note payable Capital stock Retained earnings $110,000 $110,000 40,000 50,000 100,000 100,000 $360.000 $150.000 Required: Prepare an allocation schedule for Rami's investment in Sawsan.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A-1
ces On January 1, 2023, Corgan Company acquired 80 percent of the outstanding voting stock of Smashing, Incorporated, for a total of $980,000 in cash and other consideration. At the acquisition date, Smashing had common stock of $700,000, retained earnings of $250,000, and a noncontrolling interest fair value of $245,000. Corgan attributed the excess of fair value over Smashing's book value to various covenants with a 20-year remaining life. Corgan uses the equity method to account for its investment in Smashing. During the next two years, Smashing reported the following: Items 2023 2024 Net Income $ 150,000 130,000 Dividends Declared $ 35,000 45,000 Inventory Purchases from Corgan $ 100,000 120,000 Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end of 2023 and 2024, 40 percent of the current year purchases remain in Smashing's inventory. Required: a. Compute the equity method balance in Corgan's Investment in Smashing, Incorporated, account as of December…
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A-6
2. Cinema Company acquired 75 percent of Movie Corporation's shares on December 31, 2015, at underlying book value of $98,000. At that date, the fair value of the noncontrolling interest was equal to 25 percent of the book value of Movie Corporation. Movie's balance sheet on January 1, 2018, contained the following balances: Cash Accounts Receivable Inventory Buildings and Equipment Less: Accumulated Depreciation Total Assets $50,000 Accounts Payable 35,000 Bonds Payable 40,000 Common Stock 300,000 Additional Paid-In Capital (100,000) Retained Earnings $325,000 Total Liabilities and Equities $40,000 100,000 50,000 Prepare the entries recorded on the books of each company. 75,000 60,000 $325,000 On January 1, 2018, Movie acquired 3,500 of its own $2 par value comm on shares from Nonaffiliated Corporation for $6 per share.
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No. 32
Question 1 On January 2020, RITZ Ltd acquired 80% of the ordinary shares of AUGE Ltd. The group accountant has calculated that the goodwill arising on acquisition was GH₵8,000,000. However, the financial controller has uncovered a number of errors and requires advice about how to resolve them. No entries have been posted in respect of contingent cash consideration that work be paid in 2025 if AUGE meets targets. The contingent consideration had a fair value of GH₵800,000 at acquisition and was calculated using a discount rate of 10% No fair value adjustment has been recorded in respect of AUGE’s non-depreciable land. This land had a carry amount of GH400,000 at acquisition and a fair value of GH₵600,000. AUGE’s brand is internally generated and has not been recognized in the consolidated financial statement. At acquisition it had a fair value of GH₵1,000,000 and a remaining estimated useful life of 5 years. Acquisition cost of GH₵100,000 incurred towards the acquisition process has…
L2-4 Awe Company pays CU500,000,000 for a 30% interest in Groy Company on July 1, 19x2 when the book value of Groy Company's net assets equals fair value. Awe Company amortizes any goodwill from this investment over 20 years. Information related to Groy Company is as follows: 31 Desember 19x1 31 Desember 19x2 Share capital, nominal IDR 1,000 Rp600.000.000 Rp600.000.000 Retained earning 400.000.000 500.000.000 Total Shareholders' Equity 1.000.000.000 1.100.000.000 Net profit earned during the year 19x2 200.000.000 Dividend for the year 19x2 (paid on March 1 of Rp. 50,000,000 and September 1 of Rp. 50,000,000) 100.000.000 Required: calculate Awe Company's revenue from Groy Company for the year 19x2