Advanced Financial Accounting
12th Edition
ISBN: 9781259916977
Author: Christensen, Theodore E., COTTRELL, David M., Budd, Cassy
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 1, Problem 1.2.5E
Multiple-Choice Questions on Recording Business Combinations [AICPA Adapted]
Select the correct answer for each of the following questions.
5. A and B Companies have been operating separately for five years. Each Company has a minimal amount of liabilities and a simple capital structure consisting solely of voting common stock.In exchange for 40 percent of its voting stock, A Company acquires 80 percent of the commonstock of B Company. This is a “tax-free” stock-for-stock exchange for tax purposes B Company’sidentifiable assets have a total net fair mar1et value of $800,000 and a total net book value of$580,000. The fair market value of the A stock used in the exchange is $700,000, and the fairvalue of the noncontrolling interest is $175,000. The
a. Zero.
b. $60,000.
c. $75,000.
cl. $295,000.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Based on the picture, how much is the net increase in the shareholder's equity of David Guetta Company as a result of business combination?
BUSINESS COMBINATION
Answer it with solution:
Can I have an answer in items 15,16,17, and 18? Thank you for your help!
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
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Show the solution in good accounting formarrow_forwardAccounting subject. Thank youarrow_forwardRequired information [The following information applies to the questions displayed below.) Lone Star Company is a calendar-year corporation, and this year Lone Star reported $115,000 in current E&P that accrued evenly throughout the year. At the beginning of the year, Lone Star's accumulated E&P was $13,800. At the beginning of the year, Lone Star's sole shareholder was Matt McCon. Lone Star declared $34,500 in cash distributions on each of the following dates: March 31, June 30, September 30, and December 31. (Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.) b. Suppose that Matt sold half of his shares to Chris Coop on June 1st for $47,500. How much dividend income will Matt recognize this year? Dividend recognizedarrow_forward
- Please answer the second item only, show your solution.arrow_forwardUse the PFRS for SMEs) On 31 December 20X1 entity A acquired 30 per cent of the ordinary shares that carry voting rights of entity B for ₱100,000. Entity A incurred transaction costs of ₱1,000 in acquiring these shares. Entity A has significant influence over entity B. Entity A uses the cost model to account for its investments in associates. In January 20X2 entity B declared and paid a dividend of ₱20,000 out of profits earned in 20X1. No further dividends were paid in 20X2, 20X3 or 20X4. A published price quotation does not exist for entity B. At 31 December 20X1, 20X2 and 20X3, in accordance with Section 27 Impairment of Assets, management assessed the fair values of its investment in entity B as ₱102,000, ₱110,000 and ₱90,000 respectively. Costs to sell are estimated at ₱4,000 throughout. Entity A measures its investment in entity B on 31 December 20X1, 20X2 and 20X3 respectively at: a. ₱100,000, ₱100,000, ₱100,000. b. ₱95,000, ₱95,000, ₱86,000. c. ₱98,000,…arrow_forwardPlease don't give image based answer..thankuarrow_forward
- Required information [The following information applies to the questions displayed below.] On January 2, 2024, Sanborn Tobacco Incorporated bought 5% of Jackson Industry's capital stock for $92 million. Jackson Industry's net income for the year ended December 31, 2024, was $122 million. The fair value of the shares held by Sanborn was $102 million at December 31, 2024. During 2024, Jackson declared a dividend of $62 million. 2. Assume that Sanborn sold the stock on January 2, 2025 for $114 million. Prepare the journal entries Sanborn would use to record the sale. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5). View transaction list Journal entry worksheetarrow_forwardPrepare general journal entries for the following transactions, identifying each transaction by letter: (a) Gnu Company issued 5,000 shares of 1 par common stock to the Prendergas law firm as partial payment of fees incurred to incorporate the business. Gnu was short of cash, so Prendergas agreed to accept 10,000 cash and the shares of common stock in full settlement of its bill for 55,000. (b) Gnu issued 50,000 shares of 1 par common stock in exchange for a parcel of land for building a shopping plaza. (The list price for the land was 400,000; a similar parcel in the same area sold last week for 380,000. During the past month, the price at which Gnus common stock has traded on the open market has ranged from 5 to 12 per share. Two trades occurred yesterday at 7 and 10 per share.) (c) Gnu purchased 10,000 shares of 1 par value common treasury stock for 70,000. (This is the only treasury stock that Gnu holds.) (d) Gnu sold 4,000 shares of common treasury stock for 32,000. (e) Gnu sold 5,000 shares of common treasury stock for 30,000.arrow_forward! Required information [The following information applies to the questions displayed below.] Badger Corporation declared a stock distribution to all shareholders of record on March 25 of this year. Shareholders will receive one share of Badger stock for each 10 shares of stock they already own. Madison owns 1,000 shares of Badger stock with a tax basis of $100 per share. The fair market value of the Badger stock was $110 per share on March 25 of this year. Note: Leave no answer blank. Enter zero if applicable. c. How would you answer parts (a) and (b) if Badger offered shareholders a choice between receiving one additional share of Badger stock for each 10 Badger shares held or receiving $120 cash in lieu of an additional share of stock? If she takes the: Stock Cash Taxable dividend income $ 11,000 $ 12,000 Income tax basis per share of new shares $ 12,000 $ 10,000arrow_forward
- Dogarrow_forward5. how much is the total liabilities reported in 2023? 6. how much is the total shareholders' equity reported in 2023?arrow_forwardb. Suppose that Matt sold half of his shares to Chris Coop on June 1st for $40,000. How much dividend income will Matt recognize this year? Dividend recognized Show Transcribed Text G o c. If Matt's basis in his Lone Star shares was $7,000 at the beginning of the year, how much capital gain will he recognize on the sale and distributions from Lone Star? Capital gain recognized on the sale and distributionarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
College Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,
Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT
College Accounting, Chapters 1-27
Accounting
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:Cengage Learning,
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT
Stock Market Index Definition (BEGINNER FRIENDLY EXPLANATION!); Author: It's Your Girl Rose;https://www.youtube.com/watch?v=LxI12aUaabc;License: Standard Youtube License