Suppose that Purchasing Company acquires 90% of Selling Company by issuing stock valued at $800,00O. The only difference between book value and fair value relates to depreciable plant and equipment. Plant and equipment has a market value of $400,000 and a book value of $250,000. All other book values approximate market values. Assume that the combination qualifies as a nontaxable exchange. On the date of acquisition, Selling Company's book value of equity is $600,000, which includes $150,000 of common stock and $450,000 of retained earnings. Assume a 30% tax rate. Consider the following Computation and Allocation Schedule with and without considering deferred taxes. (1) Common Stock-Selling Company 150,000 Retained Earnings-Selling Company Difference between Implied and Book Values Investment in S Company Noncontrolling Interest in Equity 450,000 288,889 800,000 88,889 Without Deferred Taxes With Deferred Taxes (2 Plant and Equipment 150,000 150,000 Goodwill 138,889 183,889 Deferred tax liability (Long-term) 45,000 Difference between 288,889 288,889 Implied and Book Values Required: 1. Post to the general ledger of the above-mentioned accounts.

Suppose that Purchasing Company acquires 90% of Selling Company by issuing stock valued at $800,00O. The only difference between book value and fair value relates to depreciable plant and equipment. Plant and equipment has a market value of $400,000 and a book value of $250,000. All other book values approximate market values. Assume that the combination qualifies as a nontaxable exchange. On the date of acquisition, Selling Company's book value of equity is $600,000, which includes $150,000 of common stock and $450,000 of retained earnings. Assume a 30% tax rate. Consider the following Computation and Allocation Schedule with and without considering deferred taxes. (1) Common Stock-Selling Company 150,000 Retained Earnings-Selling Company Difference between Implied and Book Values Investment in S Company Noncontrolling Interest in Equity 450,000 288,889 800,000 88,889 Without Deferred Taxes With Deferred Taxes (2 Plant and Equipment 150,000 150,000 Goodwill 138,889 183,889 Deferred tax liability (Long-term) 45,000 Difference between 288,889 288,889 Implied and Book Values Required: 1. Post to the general ledger of the above-mentioned accounts.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Please read through the questions parts 2 and 3 is asking for journal entry. The rest are fill ins.
If a credit sale is made to a New customer, and the amount due is received before the year ends, explain the bookkeeping work that is required for that sales amount to eventually be included in the final accounts. Give an example of the bookkeeping entries to be made.
A cash discount on purchases should be debited to ______________ Select one: A. a revenue account B. a creditor account C. a debtor account D. an expense account
Create a schedule of accounts receivable using the accounts receivable subsidiary ledger‘s.
Show a journal entry writing off an account using both the allowance method and the direct write-off method. NOTE: YOU CAN INCLUDE ANY AMOUNTS AS LONG AS THEY MAKE SENSE, BUT DO NOT FORGET TO INCLUDE ACTUAL NUMBERS FOR THIS JOURNAL SHOWING BOTH METHODS AS STATED ABOVE. THIS CAN BE MADE UP BUT DO NOT FORGET THE NUMBERS.
How to adjust entries for refunds allowances and returns
The final step when receiving customer checks by mail is for the ________ to compare two different records for the day. A. receiving agent B. controller C. treasurer D. purchasing agent thanks!!1
can you help with this asap please its for homework
What is the purpose of a Bill Payment in QuickBooks Online? Select an answer: to track purchases of products and services based on when they are rendered and delivered. to close the accounts payable cycle by recording payments made to vendors via a Bill in the past to create an expense today that will be paid in the future. to enter customer payments related to open invoices.
What is a 'bonus share'? Give the journal entries required at the date of a bonus issue
True or False all funds received daily for payment in the practice are posted in one batch
Please answer fast