The P Ltd acquires all issued capital of the S Ltd for a consideration of $1,000,000 cash and 800,000 shares eachvalued at $1.50. The summary statement of the financial position of the subsidiary company immediatelyfollowing the acquisition is:Fair value of assets acquiredFair value of liabilities acquiredTotal shareholders' equity of the subsidiary companyRetained earnings of the subsidiary company$2,640,000$720,000$800,000$1,120,000Required:(a) Pass the necessary journal entry to record the acquisitioi(b) Determine the amount of goodwill (or bargain purchase) arising out of the acquisition(c) Pass the necessary consolidation entry to eliminate the subsidiary by the parent company(d) Determine the amount of goodwill (or bargain purchase) arising out of the acquisition if the purchaseconsideration paid was $1,000,000 cash and 400,000 shares each valued at $1.50

Answered: Image /qna-images/answer/ce87af51-52da-4e67-86ef-20c1cf051d5c.jpg

Answered: The P Ltd acquires all issued capital…

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

Consolidated net income and net income attributable to the noncontrolling interest Assume that on January 1, 2021, a parent company acquired an 85% interest in a subsidiary's voting common stock. On the date of acquisition, the fair-value of the subsidiary's net assets equaled their reported book values except for machinery and equipment, which had a fair value of $720,000 and a reported book value of $300,000. the machinery and equipment had a 5-year remaining useful life and no salvage value. The following are the highly summarized pre-consolidation income statements of the parent and subsidiary for the year ended December 31, 2022: Income Statement Parent Subsidiary Revenues $2,592,000 $345,600 75,480 (1,728,000) (172,800) $939,480 $172,800 Equity income Expenses Net income For the year ended December 31, 2022, what amounts will be reported for (1) consolidated net income and (2) net income attributable to the noncontrolling interest, respectively, in the parent's consolidated…
Visno
What is the amount of pre-acquisition earnings on the acquisition date consolidated income statement if the parent acquires 90 percent of the subsidiary’s stock and the following income statement accounts exist at the acquisition date? Parent Subsidiary Sales P250,000 P60,000 Cost of Goods Sold 120,000 12,000 Depreciation Expense 10,000 5,000 Operating Expenses 40,000 8,000 Income Tax Expense 32,000 14,000 2. Using the same information in No. 1, what is the imputed value of a subsidiary if the parent pays P56,000 for 80 percent of the subsidiary’s stock? Use the following information for question 3 and 4: Marksman acquired 100 percent of Tribal Transit for P275,000. At the date of acquisition, Fast Transit…
The PTCL Ltd acquires all issued capital of the S Ltd for a consideration of $1,000,000 cash and 800,000 shares each valued at $1.50. The summary statement of the financial position of the subsidiary company immediately following the acquisition is: Fair value of assets acquired $2,640,000 Fair value of liabilities acquired $720,000 Total shareholders’ equity of the subsidiary company $800,000 Retained earnings of the subsidiary company $1,120,000 Required: (a) Pass the necessary journal entry to record the acquisition (b) Determine the amount of goodwill (or bargain purchase) arising out of the acquisition (c) Pass the necessary consolidation entry to eliminate the subsidiary by the parent company (d) Determine the amount of goodwill (or bargain purchase) arising out of the acquisition if the purchase consideration paid was $1,000,000 cash and 400,000 shares each valued at $1.50.Thanks
Pushdown Accounting Assume a parent company acquires its subsidiary by paying $1,700,000 for all of the outstanding voting shares of the investee. On the acquisition date, subsidiary's assets and liabilities have individual fair values that equal their book values, except for property equipment with a fair value greater than book value by $150,000 and license with a fair value greater than book value by $250,000. The parent and subsidiary have the following balance sheets immediately after the acquisition, but before any pushdown adjustments by the subsidiary: Parent Parent Subsidiary Assets: Cash & receivables $ 800,000 $ 350,000 Inventory 600,000 200,000 Property & equipment, net 2,300,000 1,025,000 Equity investment 1,700,000 Licenses - 275,000 $ 5,400,000 $ 1,850,000 Liabilities and stockholders' equity: Current liabilities $ 400,000 $ 400,000 Other liabilities 300,000 - Note payable - 600,000 Common stock 1,670,000…

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS