Advanced Accounting
12th Edition
ISBN: 9781305084858
Author: Paul M. Fischer, William J. Tayler, Rita H. Cheng
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 1, Problem 1.2P
To determine
Introduction: Acquisition is a corporate term used to represent purchase of another company and gaining the ownership of the company.
To show: Purchase of two companies with
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Nascent, Inc., acquires 60 percent of Sea-Breeze Corporation for $414,000 cash on January 1, 2015. The remaining 40 percent of the Sea-Breeze shares traded near a total value of $276,000 both before and after the acquisition date. On January 1, 2015, Sea-Breeze had the following assets and liabilities:The companies’ financial statements for the year ending December 31, 2018, follow:Answer the following questions:a. How can the accountant determine that the parent has applied the initial value method?b. What is the annual excess amortization initially recognized in connection with this acquisition?c. If the parent had applied the equity method, what investment income would the parent have recorded in 2018?d. What amount should the parent report as retained earnings in its January 1, 2018, consolidated balance sheet?e. What is consolidated net income for 2018 and what amounts are attributable to the controlling and noncontrolling interests?f. Within consolidated statements at January 1,…
Bar Corporation has been looking to expand its operations and has decided to acquire the assets of Vicker Company and Kendal Company. Bar will issue 30,000 shares of its $10 par common stock to acquire the net assets of Vicker Company and will issue 15,000 shares to acquire the net assets of Kendal Company.Vicker and Kendal have the following balance sheets as of December 31, 2015:Assets Vicker KendalAccounts receivable . . . . . . . . . . . . . . . . . $ 200,000 $ 80,000Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,000 85,000Property, plant, and equipment:Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,000 50,000Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . .500,000 300,000Accumulated depreciation. . . . . . . . .. . . (150,000) (110,000)Total assets . . . . . . . . . .…
Palm Corporation and Staple Company have announced terms of an exchange agreement under which Palm will issue 8,500 shares of its $15 par value common stock to acquire all of Staple Company’s assets. Palm shares currently are trading at $59, and Staple $10 par value shares are trading at $23 each. Historical cost and fair value balance sheet data on January 1, 20X2, are as follows:
Palm Corporation
Staple Company
Balance Sheet Item
Book Value
Fair Value
Book Value
Fair Value
Assets
Cash & Receivables
$
151,000
$
151,000
$
46,000
$
46,000
Land
110,000
190,000
57,000
83,000
Buildings & Equipment (net)
313,000
411,000
176,000
230,000
Total Assets
$
574,000
$
752,000
$
279,000
$
359,000
Equities
Common Stock
$
200,000
$
81,000
Additional Paid-In Capital
18,000
9,900
Retained Earnings…
Chapter 1 Solutions
Advanced Accounting
Ch. 1 - Prob. 1UTICh. 1 - Prob. 3UTICh. 1 - Prob. 4UTICh. 1 - Prob. 5UTICh. 1 - Prob. 6UTICh. 1 - Prob. 7UTICh. 1 - Prob. 8UTICh. 1 - Prob. 9UTICh. 1 - Prob. 10UTICh. 1 - Prob. 1.1E
Ch. 1 - Prob. 1.2ECh. 1 - Prob. 1.3ECh. 1 - Prob. 2ECh. 1 - Prob. 5.1ECh. 1 - Prob. 5.2ECh. 1 - Prob. 6ECh. 1 - Lake craft Company has the following balance...Ch. 1 - Prob. 8.2ECh. 1 - Prob. 8.3ECh. 1 - Prob. 9.1ECh. 1 - Prob. 9.2ECh. 1 - Prob. 1A.1.1AECh. 1 - Prob. 1A.1.2AECh. 1 - Prob. 1.2PCh. 1 - Prob. 1.3.1PCh. 1 - Prob. 1.4PCh. 1 - Jack Company is a Corporation that was organized...Ch. 1 - Prob. 1.6PCh. 1 - Prob. 1.7.1PCh. 1 - Prob. 1.7.2PCh. 1 - Prob. 1.8PCh. 1 - Prob. 1.10.A1PCh. 1 - Prob. 1.11PCh. 1 - Prob. 1.12PCh. 1 - Prob. 1.13.2PCh. 1 - Prob. 1A.1.1APCh. 1 - Prob. 1A.1.2APCh. 1 - (Note: The use 01 a financial calculator or Excel...Ch. 1 - Frontier does not have publicly traded stock. You...Ch. 1 - Frontier does not have publicly traded stock. You...Ch. 1 - Prob. 1.1B.3CCh. 1 - Prob. 1.1CCCh. 1 - Prob. 1.2.1CCh. 1 - Prob. 1.2.2CCh. 1 - Case 1-2 Disney Acquires Marvel Entertainment On...
Knowledge Booster
Similar questions
- Octane Company and Bio Company have announced terms of an Octane Company and Bio Company have announced terms of a exchange agreement under which Octane will issue 10,000 shares or Its P5 par value ordinary shares to acquire all of Bio's assets. Octane's shares are trading at p28. and Bio's P10 par value shares are trading at P15. Historical cost and fair value statement of financial position data on January 1, 2008, are as follows: Octane Company Book Bio Company Fair Value Book Value Fair Value 10 P 25,000 40,000 30,000 50,000 Value Cash P 125,000 P 125,000 75,000 Land 120,000 Buildings and Equipment (net) Total Assets 180,000 P 380,000 220,000 120,000 150,000 P 175,000 Ordinary Shares Share Prenium P 100,000 P 150,000 bloa 60,000 SvIsunt 20,000 lends odd 6 be Retained earnings Total 000 170,000 P 380,000 55,000 P 175,000 .000,011 4) Başed on the information provided, what amount will be reported for Ordinary Share in the combined company's statement of financial position immediately…arrow_forwardOn January 1, 2015, Port Company acquires 8,000 shares of Solvo Company by issuing 10,000 of its common stock shares with a par value of $10 per share and a fair value of $70 per share. The price paid reflects a control premium. The market value of the shares owned by the NCI is $80 per share. At the time of the purchase, Solvo has the following balance sheet:Appraisals indicate that book values are representative of fair values with the exception of the land and building. The land has a fair value of $180,000, and the building is appraised at $450,000. The building has an estimated remaining life of 20 years. Any remaining excess is goodwill.The following summary of Solvo’s retained earnings applies to 2015 and 2016:Balance, January 1, 2015. . . . . . . . . . . . . . . . . . . $250,000Net income for 2015. . . . . . . . . . . . . . . . . . . . . 60,000Dividends paid in 2015. . . . . . . . . . . . . . . . . . . (10,000)Balance, December 31, 2015 . . . . . . . . . . . . . . . $300,000Net…arrow_forwardDogarrow_forward
- Palm Corporation and Staple Company have announced terms of an exchange agreement under which Palm will issue 9,000 shares of its $11 par value common stock to acquire all of Staple Company's assets. Palm shares currently are trading at $55, and Staple $6 par value shares are trading at $19 each. Historical cost and fair value balance sheet data on January 1, 20X2, are as follows: Balance Sheet Item Assets Cash and Receivables Land Buildings and Equipment (net) Total Assets Equities Common Stock Additional Paid-In Capital Retained Earnings Total Equities Palm Corporation Book Value a. Common Stock b. Cash and Receivables c. Land d. Buildings and Equipment (net) e. Goodwill f. Additional paid-In Capital g. Retained Earnings $ 158,000 117,000 307,000 $ 582,000 $ 197,000 18,000 367,000 $ 582,000 Fair Value Amounts $ 158,000 184,000 419,000 $ 761,000 Staple Company Book Value $ 60,000 65,000 163,000 $ 288,000 $ 93,000 8,300 186,700 $ 288,000 Fair Value Required: What amount will be…arrow_forwardTamarisk Inc., a public company, owns 20% of Dong Ltd's common shares for strategic purposes. The investment's carrying amount at January 1, 2024, is $299,000. During the year, Dong reported profit of $255,400 and paid a dividend of $22,400. The investment's fair value on December 31, 2024, Tamarisk's year end, is $316,100. (a) Assuming Tamarisk has significant influence over Dong, indicate the amount reported on the balance sheet for the investment at December 31 and the amount of income from this investment reported in the income statement. Balance Sheet: Income Statement: eTextbook and Media $ Equity Methodarrow_forwardPurple Ltd has recently undertaken a business combination with Yellow Ltd. At the start of negotiations, Purple Ltd owned 30% of the shares of Yellow Ltd. The current discussions between the two entities concerned Purple Ltd’s acquisition of the remaining 70% of shares of Yellow Ltd. The negotiations began on 1 January 2022 and enough shareholders in Yellow Ltd agreed to the deal by 30 September 2022. The purchase agreement was for shareholders in Yellow Ltd to receive in exchange shares in Purple Ltd. Over the negotiation period, the share price of Purple Ltd shares reached a low of $5.40 and a high of $6.20. The accountant for Purple Ltd, Mr Nashville, knows that AASB 3 has to be applied in accounting for business combinations. However, he is confused as to how to account for the original 30% investment in Yellow Ltd, what share price to use to account for the issue of Purple Ltd’s shares, and how the varying dates such as the date of exchange and acquisition date will affect the…arrow_forward
- Prior to January 2, 2018, Prestar and Saturn are separate corporations. Saturn Corporation is contemplating a major expansion and seeks to be purchased by a larger corporation with available cash. Prestar Corporation issues $1,350,000 of bonds and uses the proceeds to buy 30,000 newly issued Saturn shares for $45 per share. The price reflects a control premium since the fair value of the NCI shares is $40. Just prior to the issue of the bonds and the issue and purchase of Saturn stock, Prestar and Saturn have the following separate balance sheets: Assets Prestar Corporation Saturn CorporationCurrent assets . . . . . . . . . . . . . . . . . . . $ 600,000 $100,000Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,000 60,000Property, plant, and equipment . . . . 700,000 400,000Total assets. . . . . . . . . . . . . . . . . . . . . . . $1,450,000…arrow_forwardArther Corporation acquired all of the outstanding $10 par voting common stock of Trent Inc., on January 1, 2016, in exchange for 50,000 shares of its $10 par voting common stock. On December 31, 2015, the common stock of Arther had a closing market price of $15 per share on a national stock exchange. The retained earnings balance of Trent Inc., was $156,000 on the date of the acquisition. Both companies continued to operate as separate business entities maintaining separate accounting records with years ending December 31.On December 31, 2018, after year-end adjustments but before the nominal accounts were closed, the companies had the following condensed statements: (see attachment)Additional information is as follows: a. There have been no changes in the common stock and additional paid-in capital in excess of par accounts since the one necessitated in 2016 by Arther’s acquisition of Trent, Inc. b. At the acquisition date, the market value of Trent’s machinery exceeded book value by…arrow_forwardKrieger Krisp Donuts, Inc. acquired 40% of the voting common shares of Delevan Bakers Corporation on January 1, 2022, at a total cost of $2,535,000. At acquisition, the reported book value of Delevan Bakers' net assets equaled its fair value. This investment allows Krieger to exert significant influence over Delevan's operating and financing policies. At the end of 2022, Delevan reported $769,500 in net income and declared and paid $123,475 in dividends for the period. At the end of 2023, Delevan reported a net loss of $432,000. No dividends were declared in 2023. What journal entries should Krieger record related to its investment in Delevan Bakers? What is the amount of the investment in Delevan Bakers at December 31, 2022? At December 31, 2023? What journal entries should Krieger record related to its investment in Delevan Bakers? Begin by recording the journal entry required for the acquisition of the investment in Delevan Bakers. (Record debits first, then credits. Exclude…arrow_forward
- Gera Corporation owns two financial investments in the shares of listed companies. Details of which are as follows: Investment 1 – Acquired on September 1, 2020, at a cost of P50,000 with a Fair value of P60,000 at year-end for the purpose of trading. Investment 2 - Acquired on August 1, 2020, at a cost of P25,000 to hold indefinitely. Its fair value at year-end is P20,000. What are the amounts to appear in the Statement of Comprehensive Income for the year ended September 30, 2020?arrow_forwardOn January 1, 2023, Fisher Corporation purchased 40 percent (70,000 shares) of the common stock of Bowden, Incorporated, for $974,000 in cash and began to use the equity method for the investment. The price paid represented a $60,000 payment in excess of the book value of Fisher's share of Bowden's underlying net assets. Fisher was willing to make this extra payment because of a recently developed patent held by Bowden with a 15-year remaining life. All other assets were considered appropriately valued on Bowden's books. Bowden declares and pays a $102,000 cash dividend to its stockholders each year on September 15. Bowden reported net income of $390,000 in 2023 and $342,000 in 2024. Each income figure was earned evenly throughout its respective years. On July 1, 2024, Fisher sold 10 percent (17,500 shares) of Bowden's outstanding shares for $332,000 in cash. Although it sold this interest, Fisher maintained the ability to significantly influence Bowden's decision-making process.…arrow_forwardSky Ltd acquired all the issued shares of Jupiter Ltd on 1 January 2019. The following transactions occurred between the two entities: • On 1 June 2020, Sky Ltd sold inventory to Jupiter Ltd for $12 000; By 30 June 2020, Jupiter Ltd had sold 20% of this inventory to other entities for $3000. The other 80% was all sold to external entities by 30 June 2021 for $13 000. . During the 2020-21 period, Jupiter Ltd sold inventory to Sky Ltd for $6000 at cost plus 20% markup. Of this inventory, 20% remained on hand in Sky Ltd at 30 June 2021. The tax rate is 30%. Required: Prepare the consolidation worksheet entries for Sky Ltd at 30 June 2021 concerning the intragroup inventory transfers.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
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