3. What is the carrying amount of the investment inof the outstanding ordinary shares of Free Company forP5,000,000 cash. Cyber Company accounts for this investmentAt the date of acquisition, Free Company's net assets had aexcess of carrying amount. The land was sold during theFree Company owned land with a fair value of P1,000,000 inAt the beginning of current year, Cyber Company bought 30%Problem 17-16 (IAA)by the equity method.carrying amount of P12,000,000.acurrent year.The remaining difference between the purchase price andihe carrying amount of the underlying equity cannot beattributed to any identifiable tangible or intangible asset.Accordingly, the remaining difference is allocated togoodwill.Free Company reported net income of P6,000,000 and paidcash dividend of P1,500,000 during the current year.1. What is the implied goodwill from the acquisition?a. 1,400,000b. 1,000,000с. 1,100,000d.2. What amount should be reported as investment incomefor the current year?а. 2,100,000b. 1,950,000c. 1,500,000d. 1,800,000associate at year-end?a. 5,000,000b. 6,500,000c. 6,050,000d. 6,350,000

Since, the difference between Purchase Price and Net Assets cannot be attributed to any identifiable…

Answered: What is the carrying amount of the…

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

Mainline Produce Corporation acquired all the outstanding common stock of Iceberg Lettuce Corporation for $30,000,000 in cash. The book values and fair values of Iceberg's assets and liabilities were as follows: Current assets Property, plant, and equipment Other assets Current liabilities Long-term liabilities Required: 1. Calculate the amount paid for goodwill. 2. Determine the financial statement effects of the acquisition. Required 1 Required 2 Complete this question by entering your answers in the tabs below. Book Value $ 11,400,000 20,200,000 3,400,000 7,800,000 13,200,000 Assets Determine the financial statement effects of the acquisition. Note: Amounts to be deducted should be indicated with a minus sign. Enter your answer in millions rounded to 1 decimal place. (i.e. 5,500,000 should be entered as 5.5). Accounts Payable Accounts Receivable Accumulated Depreciation Advertising Expense Fair Value $ 14,400,000 26,200,000 4,400,000 7,800,000 12,200,000 Balance Sheet Liabilities…
If CARDO Co purchases the net assets of SYANO Co by issuing 5,000 shares of their P20 par valueshares with a fair value of P40 per share, incurs a mortgage loan for P90,000, pays P150,000 cash andpaying direct, indirect and stock issue costs of P75,000, P50,000 and P40,000 respective. REQUIREMENTS:A. GoodwillB. Consolidated Total Assets at the date of acquisition
ACME Co. paid $110,000 for the net assets of Comb Corp. At the time of the acquisition the following information was available related to Comb's balance sheet: Book Value Fair Value Current Assets $50,000 $ 50,000 Building 80,000 100,000 Equipment 40,000 50,000 Liabilities 30,000 30,000 What is the amount recorded by ACME for the Building? a. $110,000 b. $20,000 c. $80,000 d. $100,000
ACME Co. paid $110,000 for the net assets of Comb Corp. At the time of the acquisition the following information was available related to Comb's balance sheet: Book Value Fair Value Current Assets $50,000 $ 50,000 Building 80,000 100,000 Equipment 40,000 50,000 Liabilities 30,000 30,000 What is the amount recorded by ACME for the Building? a. $110,000 b. $20,000 c. $80,000 d. $100,000
Horan Ltd purchases the Coolum Store for the consideration of: Cash $250,000 Land Horan Ltd is going to transfer the title of some land to the owners of the Coolum Store (the carrying amount of the land is $120 000; fair value is $295,000). The statement of financial position of the Coolum Store as at the date of acquisition shows assets of $290,000 and liabilities of $95,000. All assets are fairly valued except the Coolum Store's building, which is in the financial statements at $60,000 but has a fair value of $85,000. There are no contingent liabilities. Required Calculate the amount of goodwill?
Mokwena Limited acquired 48% investment in Masibi Limited at R100 000. At the date of acquisition, which is 31 March2016, Masibi Limited’s statement of financial position showed the following balances:Non-current assets R692 000Current assets R44 000Non-current liabilities R268 000Current liabilities R218 000Mokwena Limited applies equity accounting for all its investments in associates and joint ventures. The financial year-endfor Mokwena Limited is on 31 March of each year.What amount will be recorded as investment in associate in Mokwena Limited’s statement of financial position as at 31March 2016?
If PROMDI Co., a new company would acquire the net assets of CARDO Co and SYANO Co. PROMDI Co will be issuing 30,000 shares to CARDO and 12,000 shares to SYANO. The following is the balance sheet of PROMDI Co, followed by the fair values and additional unpaid costs incurred by PROMDI in the acquisition: REQUIREMENTS:A. GoodwillB. Consolidated Total Assets at the date of acquisitionC. Consolidated Total Liabilities at the date of acquisitionD. Consolidated Equity at the date of acquisition
On 1/1/2019 P Company acquired 70% of S company for 400000 JD. On 31/12/2019 S company reported net income 41000 ID and declared dividends 11000 JD. Positive differences is 35000 JD relating to assets with 5 years life. Using the complete equity method investment balance on 31/12/2019 is: Select one: O a. 370600 Ob. 369200 O c. 367800 d. 366400
In The Process Of the Acquisition, ABC Incorporation Paid In Cash the Following Expenses US Accounting fees 30,000 Travel expenses 10,000 Accounting fees (SEC) 10,000 SEC filing fees 20,000 Required: Prepare the journal entry to record the acquisition expenses
M.T. Glass, Inc. purchased the following investments onJanuary 1, 2028:1. 21,000 shares (representing 42%) of AA Company stockfor $546,0002. 18,000 shares (representing 9%) of ZZ Company stockfor $306,000AA Company and ZZ Company reported the following informationfor the years 2028 and 2029:2028: AA Company ZZ CompanyNet income $140,000 $225,000Total dividends paid $ 78,000 $ 53,000Market value at Dec 31 $33 per share $22 per share2029: AA Company ZZ CompanyNet income $210,000 $280,000Total dividends paid $ 90,000 $125,000Market value at Dec 31 $35 per share $23 per shareCalculate the total investments shown in M.T. Glass, Inc.'sDecember 31, 2028 balance sheet (i.e., the balance in theInvestment in AA Company plus the balance in the Investmentin ZZ Company).
Luxemburg Company purchased the following investments during 2021: Initial Cost Transaction cost Fair value Year-end 2021 Security A P180,000 P5,000 P170,000 Security B 150,000 2,500 120,500 On July 31, 2022, the entity sold all of the shares of Security B for P125,800. On December 31, 2022, the shares of Security A had a fair value of P205,000. No other activity occurred during 2022 concerning the portfolio. Retained earnings before any adjustments on equity securities on December 31, 2022, is P975,000. Assuming nontrading securities, how much is the Retained earnings on December 31, 2022?
On January 1, 2009, (A) Co. acquired all of the common stock of (B) Corp. For 2009, (B) earned net income of JD 360,000 and paid dividends of JD 190,000. Amortization of the patent allocation that was included in the acquisition was JD 6,000. 1. How much difference would there have been in (B)'s income with regard to the effect of the investment, between using the equity method or using the cost value method ? 2. How much difference would there have been in (A)'s income with regard to the effect of the investment, between using the equity method or using the partial equity method ?

SEE MORE QUESTIONS

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