Ryan Company purchased 80% of Chase Company for $270,000 when Chase's book value was $300,000. Chase has 50,000 shares outstanding and currently has a book value of $400,000. Assume Chase issues 30,000 additional shares common stock solely to Ryan for $12 per share. What is the new percent ownership Ryan owns in Chase? Multiple Choice O 90.0% 87.5% 82.5% < Prev 16 of 20 Next >

Ryan Company purchased 80% of Chase Company for $270,000 when Chase's book value was $300,000. Chase has 50,000 shares outstanding and currently has a book value of $400,000. Assume Chase issues 30,000 additional shares common stock solely to Ryan for $12 per share. What is the new percent ownership Ryan owns in Chase? Multiple Choice O 90.0% 87.5% 82.5% < Prev 16 of 20 Next >

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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PROBLEM V. On January 2, 2020, P Company acquired 80% interest in S Company for P4,125,000 cash. On this date, the outstanding ordinary share capital and accumulated profits of P Company and S Company are as follows: P Company S Company Ordinary share capital P2,250,000 P1,312,000 Share premium 1,500,000 Accumulated profits (losses) 5,250,000 3,187,500 There was no issuance of ordinary shares during the year. Noncontrolling interest is initially measured at fair value. Fair value of the following assets of S Company exceeded their book values as follows: Inventories, P210,000; Property and equipment (remaining useful life 10 years), P127,500. All other assets and liabilities are fairly valued. Goodwill if any is not impaired. On December 31, 2020, the two companies reported the following operating results: P Company S Company Net income P1,785,000 P975,000 Dividends paid 525,000 262,500 1. Compute for the consolidated shareholders' equity.
Consider the following premerger information about Firm X and Firm Y: Firm X Firm Y Total earnings $ 40,000 $ 15,000 Shares outstanding 20,000 20,000 Per-share values: Market $ 49 $ 18 Book $ 20 $ 7 Assume that Firm X acquires Firm Y by paying cash for all the shares outstanding at a merger premium of $4 per share. Assuming that neither firm has any debt before or after the merger, what are the total assets of Firm X after the merger?
Bonus Question On 1/1/20x1, Palma Company acquires 25% investment in the voting common stock of Small Fish, Inc. for $50,000. Palma Company accounts for their investment using the equity method. 1) If, for fiscal year-end 20x1, Small Fish, Inc. incurs a net loss of $250,000, how should Palma Company account for their share of Small Fish, Inc.'s net loss? 2) Suppose for fiscal year-end 20x2, Small Fish, Inc. incurs a net loss of $125,000. How should Palma Company account for their share of Small Fish, Inc.'s net loss? 3) Lastly, assume that SmalI Fish, Inc. returns to profitability and generates $300,000 of net income for fiscal year- end 20x3. How should Palma Company account for their share of Small Fish, Inc.'s 20x3 net income? Assume that Palma Company does not pay dividends during fiscal years 20x1, 20x2, and 20x3. (For this question, you do not have to prepare journal entries. Instead, you can explain your answer and show the effect on Palma Company's investment account)
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Hepner Corporation has the following stockholders’ equity accounts: Preferred stock (8% cumulative dividend) $ 660,000 Common stock 910,000 Additional paid-in capital 460,000 Retained earnings 1,110,000 The preferred stock is participating. Wasatch Corporation buys 70 percent of this common stock for $1,820,000 and 60 percent of the preferred stock for $810,000. The acquisition-date fair value of the noncontrolling interest in the common shares was $780,000 and was $540,000 for the preferred shares. All of the subsidiary’s assets and liabilities are viewed as having fair values equal to their book values. What amount is attributed to goodwill on the date of acquisition? Goodwill:
15. Rock Company reported the following shareholders equity on December 31, 2022: Share capital, P50 par value 3,000,000 Share premium 600,000 Retained earnings 4,200,000 A 15% share dividend was declared and distributed on December 31, 2022 when entity’s share was selling at P65. What amount should be reported as share capital outstanding? Group of answer choices 3,450,000 3,585,000 3,615,000 4,185,000
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