Advanced Financial Accounting
12th Edition
ISBN: 9781259916977
Author: Christensen, Theodore E., COTTRELL, David M., Budd, Cassy
Publisher: Mcgraw-hill Education,
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Chapter 1, Problem 1.16E
a.
To determine
Concept Introduction:
Amount of goodwill impairment, if any, that should be recognized at December 31, 20X4, if the fair value of the S Company reporting unit is determined to be
b.
To determine
Concept Introduction:
Goodwill: It is the excess payment made over and above the fair value of assets acquired by the parent company to the subsidiary company against the assets and liabilities acquired.
Goodwill that needs to be reported in the financial statement and amount of goodwill impairment to be recognized, if any, if Division K’s fair value is determined to be
c.
To determine
Concept Introduction:
Goodwill: It is the excess payment made over and above the fair value of assets acquired by the parent company to the subsidiary company against the assets and liabilities acquired.
Goodwill that needs to be reported in the financial statement and amount of goodwill impairment to be recognized, if any, if Division K’s fair value is determined to be
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1. On January 1, 20X1, Sit Co. acquired 75% controlling interest in Stand Co. for P1,000,000. On the saiddate, the fair value of Stand’s identifiable net assets is P800,000. Sit Co. incurred transaction costs ofP100,000 on the acquisition.
Required: Determine the following:a. The goodwill if Sit Co. uses the full IFRS and the measure non-controlling interest shall be measuredon a proportionate basis.b. The goodwill if Sit Co uses the IFRS for SMEs.c. The goodwill on December 31, 20X1 under full IFRS and IFRS for SMEs
6. Tulip Company purchased the net assets of another entity for
P2,000,000. On the sate of the transaction, the acquire had
P800,000 of liabilities
The assets of the acquiree at fair value were $1,900,000 for current
assets and P1,600,000 for noncurrent assets.
What is the amount of gain on bargain purchase?
a. P 700,000
b. P-700,000
c. P 800,000
d. P-800,000
Chapter 1 Solutions
Advanced Financial Accounting
Ch. 1 - What types of circumstances would encourage...Ch. 1 - How would the decision to dispose of a segment of...Ch. 1 - Prob. 1.3QCh. 1 - Prob. 1.4QCh. 1 - Prob. 1.5QCh. 1 - Prob. 1.6QCh. 1 - Prob. 1.7QCh. 1 - Prob. 1.8QCh. 1 - Prob. 1.9QCh. 1 - Prob. 1.10Q
Ch. 1 - Prob. 1.11QCh. 1 - Prob. 1.12QCh. 1 - Prob. 1.13QCh. 1 - Prob. 1.14QCh. 1 - Within the measurement period following a business...Ch. 1 - Prob. 1.16QCh. 1 - Prob. 1.1CCh. 1 - Prob. 1.2CCh. 1 - Prob. 1.3CCh. 1 - Prob. 1.4CCh. 1 - Risks Associated with Acquisitions Not all...Ch. 1 - Prob. 1.6CCh. 1 - Prob. 1.1.1ECh. 1 - Prob. 1.1.2ECh. 1 - Prob. 1.1.3ECh. 1 - Multiple-Choice Questions on Complex Organizations...Ch. 1 - Prob. 1.1.5ECh. 1 - Prob. 1.2.1ECh. 1 - Prob. 1.2.2ECh. 1 - Multiple-Choice Questions on Recording Business...Ch. 1 - Prob. 1.2.4ECh. 1 - Multiple-Choice Questions on Recording Business...Ch. 1 - Multiple-Choice Questions on Reported Balances...Ch. 1 - Multiple-Choice Questions on Reported Balances...Ch. 1 - Prob. 1.3.3ECh. 1 - Prob. 1.3.4ECh. 1 - Prob. 1.4.1ECh. 1 - Prob. 1.4.2ECh. 1 - Prob. 1.4.3ECh. 1 - Multiple-Choice Questions Involving Account...Ch. 1 - Prob. 1.4.5ECh. 1 - Prob. 1.5ECh. 1 - Prob. 1.6ECh. 1 - Prob. 1.7ECh. 1 - Prob. 1.8ECh. 1 - Prob. 1.9ECh. 1 - Prob. 1.10ECh. 1 - Balances Reported Following Combination Palm...Ch. 1 - Goodwill Recognition Spur Corporation reported the...Ch. 1 - Acquisition Using Debentures Planter Corporation...Ch. 1 - Bargain Purchase Using the data resented in E1-13,...Ch. 1 - Prob. 1.15ECh. 1 - Prob. 1.16ECh. 1 - Prob. 1.17ECh. 1 - Prob. 1.18ECh. 1 - Prob. 1.19ECh. 1 - Prob. 1.20ECh. 1 - Prob. 1.21ECh. 1 - Prob. 1.22ECh. 1 - Prob. 1.23ECh. 1 - Prob. 1.24PCh. 1 - Prob. 1.25PCh. 1 - Prob. 1.26PCh. 1 - Acquisition in Multiple Steps Peal Corporation...Ch. 1 - Prob. 1.28PCh. 1 - Prob. 1.29PCh. 1 - Prob. 1.30PCh. 1 - Prob. 1.31PCh. 1 - Computation of Account Balances Saspro Division is...Ch. 1 - Prob. 1.33PCh. 1 - Prob. 1.34PCh. 1 - Prob. 1.35PCh. 1 - Business Combination Following are the balance...Ch. 1 - Prob. 1.37PCh. 1 - Prob. 1.38PCh. 1 - Prob. 1.39PCh. 1 - Prob. 1.40P
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- Assume that ayisiyiniwiwinak Corp. paid $19 million to purchase 10-Trees Inc. Below is a summary of the balance sheet of 10-Trees Inc. at the time of the ayisiyiniwiwinak Corp. acquisition (amounts are given in million $). The fair value of 10-Tree Inc.'s non-current assets was higher than the book value and amounted to $24 at that time. Assets Current assets Non-current assets Total assets 6 18 24 Liabilities Current liabilities Non-current liabilities Total liabilities Shareholders' equity Common shares Retained earnings Total shareholders' equity Total liabilities and shareholders' equity 8 10 18 2 4 6 24 Requirement 1: Based on the information provided above, fill Blanks 1 and 2. Blank #1: What is the goodwill resulting from this transaction? Enter your response as a plain number (no $-signs or decimals).arrow_forwardWhat is the non-controlling Interest in Net Income for the year 20x6? The Non-controlling Interest in Net Assets of Subsidiary for 20x6 should be?arrow_forwardEliminating Entries, Goodwill Polaris Company acquires all of the stock of SSC, Inc. for $60 million in cash. At the date of acquisition, SSC's current assets had a book value of $20 million, its noncurrent assets had a book value of $80 million, and its liabilities had a book value of $90 million. It is determined that the book values of SSC's net assets approximate fair value at the date of acquisition. SSC's shareholders' equity consists of capital stock of $2 million, retained earnings of $9 million (credit balance), and treasury stock of $1 million. Required Prepare the eliminating entries necessary to consolidate the balance sheet accounts of Polaris and SSC at the date of acquisition. Enter answers in millions. Description Ref. (E) Capital stock (R) Investment in SSC ¶ Debit Creditarrow_forward
- Determine the consolidated non controlling interest in net income in the year 20x6arrow_forwardHigh, a parent company, acquired Low, an unincorporated entity, for $2,800,000. A fair value exercise performed on Low's net assets at the date of purchase showed: $'000 Property, plant and equipment 3,000 Identifiable intangible asset 500 Inventory 300 Trade receivables less payables 200 4,000 How should the purchase of Low be reflected in High's consolidated statement of financial position? Record the net assets at their values shown above and credit profit or loss with $1,200,000 Record the net assets at their values shown above and credit High's consolidated goodwill with $1,200,000 Write off the intangible asset ($500,000), record the remaining net assets at their values shown above and credit profit or loss with $700,000,000 Record the purchase as a financial asset investment at $2,800,000arrow_forwardAfter the business combination on the basis of full-goodwill approach, what amount of total assets will be reported? (Use only the given information) a. P1,081,000 b. P1,121,000 c. P1,196,500 d. P1,231,500arrow_forward
- On January 1, 2021 Major acquired 60% of Minor for a cash payment of $600,000. At date of acquisition, the fair value of Minor's net assets were $300,000. Assuming there is no control premium, how much Goodwill is recorded in the consolidated financial statements $420,000 $300,000 $700,000 $60,000arrow_forwardDetermine the Non-controlling interest in Net assests of subsidiaryarrow_forwardProfessor Corporation acquired 70 percent of Scholar Corporation's common stock on December 31, 20X4, fr $102,200. The fair value of the noncontrolling interest at that date was determined to be $43,800. Data from the balance sheets of the two companies Included the following amounts as of the date of acquisition: Item Cash Accounts Receivable Inventory Land Buildings & Equipment Less: Accumulated Depreciation. Investment in Scholar Corporation Total Assets Accounts Payable Mortgage Payable Common Stock Retained Earnings Total Liabilities & Stockholders' Equity Professor Corporation $ 50,300 90,000 Scholar Corporation $21,000 44,000 130,000 75,000 60,000 30,000 410,000 250,000 (150,000) (80,000) 102,200 $ 692,500 $340,000 $ 152,500 $ 35,000 250,000 180,000 80,000 40,000 210,000 85,000 $ 692,500 $340,000 At the date of the business combination, the book values of Scholar's assets and liabilities approximated fair value except for Inventory, which had a fair value of $81,000, and…arrow_forward
- Sub Corporation reports net assets of P300,000 at book value. These net assets have an estimated fair value of P350,000. Parent Corporation buys 80% ownership of Sub for P300,000; there is a control premium of P10,000 included in the purchase price.Of the goodwill reported in the consolidated balance sheet (as of date of acquisition), how much is attributable to the non-controlling interest? A. 3,000 B. 5,000 C. 2,500 D. 4,500arrow_forwardNorthern Company acquired Southern Company. The purchase price included all Southern's assets and liabilities and was in the amount of $673,750. Below is information related to the two companies: Northern $1,052,000 Fair value of assets Fair value of liabilities Reported assets Reported liabilities Net income for the year How much goodwill will Northern record in its acquisition of Southern? 585,000 806,000 488,000 41,000 Southern $784,000 302,000 649,000 264,000 65,000arrow_forward3. On January 1, 2020, Sit Company acquired 75% controlling interest in Stand Co. for P1,000,000. On the said date, the fair value Stand's identifiable net assets are P800,000. Sit. Co. incurred transaction costs of P100,000 on the acquisition. Compute for the goodwill on under full IFRS and IFRS for SMES.arrow_forward
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