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
Question
Chapter 1, Problem 1.3.3E
To determine
It is an intangible asset which is calculated when one company acquires another company by paying an amount which is higher than the fair value of net assets. It occurs due to brand name of the company, good customer base, good relations with customers, good relations with employees, etc.
To choose:The correct option out of four given options.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Please help me
Bula Investments acquired $240,000 of Effenstein Corp., 8% bonds at their face amount on October 1, 20Y1. The bonds pay interest on October 1 and April 1. On April 1, 20Y2, Bula sold $90,000 of Effenstein Corp. bonds at 102.
Journalize the entries to record the following selected transactions:
Do not round interim calculations. Round final answers to nearest dollar. If an amount box does not require an entry, leave it blank.
Question Content Area
a. The initial acquisition of the Effenstein Corp. bonds on October 1, 20Y1.
20Y1, Oct. 1
Investments-Effenstein Corp. Bonds
Investments-Effenstein Corp. Bonds
Cash
Cash
Question Content Area
b. The adjusting entry for 3 months of accrued interest earned on the Effenstein Corp. bonds on December 31, 20Y1.
20Y1, Dec. 31
Interest Receivable
Interest Receivable
Interest Revenue
Interest Revenue
Question Content Area
c. The receipt of semiannual interest on April 1, 20Y2.…
A-1
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
Similar questions
- please make sure you are using the values in this question because they are differerentarrow_forwardBelow is the statement of realization and liquidation of Alex Corporation, which is under receivership for the month ended July 31, 20x5:AssetsAssets acquired: Assets realized:Accounts receivable P20,000 Investment at fair value P24,000Assets to be realized: Assets not realized:Investment at fair value 32,000 Accounts receivable 10,000Accounts receivable 76,000 Merchandise inventory 30,000Merchandise inventory 40,000LiabilitiesLiabilities liquidated: Liabilities to be liquidated:Accounts payable P56,000 Accounts payable P90,000Liabilities not liquidated: Liabilities assumed:Accounts payable 20,000 Accounts payable 16,000Accrued expenses 4,000Supplementary Items Supplementary Expenses Supplementary IncomePurchases P3,000 Sales on account P12,000Expenses 15,000 Cash sales 40,000Interest income 4,000QUESTIONS:9. What is the net income or loss for the period? ______________arrow_forwardThe balance sheets of E Ltd. and J Ltd. on December 30, Year 6, were as follows: Cash and receivables Inventory Plant assets (net) Intangible assets Current liabilities Long-term debt Common shares Retained earnings (deficit) Costs of arranging the acquisition Costs of issuing shares. On December 31, Year 6, E Ltd. issued 497 shares, with a fair value of $26 each, for 70% of the outstanding shares of J Ltd. Costs involved in the acquisition, paid in cash, were as follows: Plant assets Long-term debt The carrying amounts of J Ltd.'s net assets were equal to fair values on this date except for the following: Assets Liabilities and Equity J Ltd. $ 20,900 9,700 71,900 7,400 $ 109,900 $ 64,400 $ 30,100 98,900 45,200 155,800 46,600 91,500 (12,000) $ 410,600 $ 109,900 Fair value $ 65,700 42,800 E Ltd. was identified as the acquirer in the combination. Required: (a) Prepare the consolidated balance sheet of E Ltd. on December 31, Year 6, under the identifiable net assets method. Assets E Ltd.…arrow_forward
- Unusual income statement items Assume that the amount of each of the following items is material to the financial statements. Classify each item as either normally recurring (NR) or unusual (U) items. If unusual item, then specify if it is a discontinued operations item (DO). a. Interest revenue on notes receivable. b. Gain on sale of segment of the company's operations that manufactures bottling equipment. c.Loss on sale of investments in stocks and bonds. d. Uncollectible accounts expense. e. Uninsured flood loss. (Hood insurance is unavailable because of periodic Hooding in the area.)arrow_forwardnEED IN 10 MINUTES 9. On January 1, 20x1, an entity purchased marketable equity securities for P2,500,000. The entity paid commission and taxes of P190,000. The equity securities do not qualify as financial asset held for trading. The entity made irrevocable election to present unrealized gain and loss in other comprehensive income. The securities have a market value of P2,600,000, and P2,750,000 on December 31, 20x1 and December 31, 20x2. On July 1, 2022, half of the securities are sold for P1,400,000. On July 1, 2022, the net increase/ decrease in retained earnings account is (sample answer: 10,500 increase or 10,500 decrease)arrow_forwardOn March 1, ABC Inc acquired equity securities at the market value of P1,200,000. Broker fees of P50,000 were incurred in relation to the purchase. On December 31, the securities had a market value of P1,500,000. Required: a. Determine the amount at which the financial asset should be recognized initially. b. Prepare adjusting entry, if any, on December 31. Assumptions: The securities are classified as At fair value through profit or loss At fair value through other comprehensive income 1. 2.arrow_forward
- On January 1, 20X1, Hermione, Inc., an SME, paid cash of P600,000 for all the outstanding shares of Weasley Company. The carrying value of the assets and liabilities of Weasley on January 1, 20X1 follows:Accounts Receivable 90,000 Inventory 180,000Property & Equipment (net of Accumulated Depreciation of P220,000) 320,000Goodwill 100,000Liabilities 120,000Net income of Hemione and Weasley for 20X1 amounted to P200,000 and P80,000, respectively. Hermione received dividend of P25,000 from Weasley during 20X1. The Property & Equipment has original useful life of 10 years and was already held for 4 years as of date of acquisition.What is…arrow_forwardNorth Ltd acquired $100,000 of shares in South Ltd for trading purposes on 1 January 20X3. Transaction costs of $2,000 were incurred. The fair value of the shares at 31 December 20X3 was $120,500. Choose the account names and calculate the amount that correctly account for this investment on 31 December 20X3 (amount for the credit entry is not required). ENTER YOUR ANSWER IN "Amount" WHOLE NUMBERS WITH NO COMMAS OR DOLLAR SIGNS (EG $1,000,000 SHOULD BE SHOWN AS 1000000; -$1,000,000 SHOULD BE SHOWN AS -1000000). Dr Cr Financial asset Expense Cash Ple Gain in FV-OCI Financial liability Gain in FV-P&L ◆ Amount Amount not required of the question.arrow_forwardRequired information [The following information applies to the questions displayed below.] Brooks Company purchases debt investments as trading securities at a cost of $77,000 on December 27. This is its first and only purchase of such securities. At December 31, these securities had a fair value of $87,000. Brooks sells a portion of its trading securities (costing $38,500) for $41,000 cash. Analyze each transaction above by showing its effects on the accounting equation-specifically, identify the accounts and amounts (including + or -) for each transaction.arrow_forward
- M17.arrow_forwardG.252. Required information Skip to question [The following information applies to the questions displayed below.] Brooks Company purchases debt investments as trading securities at a cost of $77,000 on December 27. This is its first and only purchase of such securities. At December 31, these securities had a fair value of $87,000. Brooks sells a portion of its trading securities (costing $38,500) for $41,000 cash. Analyze each transaction above by showing its effects on the accounting equation—specifically, identify the accounts and amounts (including + or −) for each transaction.arrow_forwardThe following book and fair values were available for Beech Company as of June 1: Inventory Land Buildings Trademarks Items Accounts payable Common stock 717 Additional paid-in capital Retained earnings, 1/1 Revenues Expenses Book Value Fair Value $ 406,000 817,500 2,005,000 0 $363,500 1,087,500 2,314,750 868,500 (128,500) (128,500) (2,000,000) (500,000) (424,500) (482,500) 307,000 0 0 0 9 0 Alder Company pays $4,050,000 cash and issues 22,800 shares of its $2 par value common stock (fair value of $50 per share) for all of Beech's common stock in a merger, after which Beech will cease to exist as a separate entity. Stock issue costs amount to $33,500, and Alder pays $44,000 for legal fees to complete the transaction. Required: Prepare Alder's journal entries to record its acquisition of Beech. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Survey of Accounting (Accounting I)AccountingISBN:9781305961883Author:Carl WarrenPublisher:Cengage Learning
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Survey of Accounting (Accounting I)
Accounting
ISBN:9781305961883
Author:Carl Warren
Publisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning