11th Edition

ISBN: 9780078025877

Author: Theodore E. Christensen, David M Cottrell, Cassy JH Budd Advanced Financial Accounting

Publisher: McGraw-Hill Education

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Textbook Question

Chapter 1, Problem 1.36P

Business Combination

Following are the balance sheets of Boogie Musical Corporation and Toot-Toot Tuba Company as of December 31, 20X5.

Chapter 1, Problem 1.36P, Business Combination Following are the balance sheets of Boogie Musical Corporation and Toot-Toot , example 1

In preparation for a possible business combination, a team of experts from Boogie Musical made a thorough examination and audit of Toot-Toot Tuba. They found that Toot-Toot’s assets and liabilities were correctly stated except that they estimated uncollectible accounts at $1.400. The experts also estimated the market value of the inventory at $35.000 and the market value of the plant and equipment at $500.000. The business combination took place on January 1, 20X6, and on that date Boogie Musical acquired all the assets and liabilities of Toot-Toot Tuba. On that date. Boogie’s common stock was selling for $55 per share.

Required

Record the combination on Boogie’s books assuming that Boogie issued 9.000 of its $10 par common shares in exchange for Toot-Toot’s assets and liabilities.

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Chapter 1, Problem 1.35P

Chapter 1, Problem 1.37P

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Chapter 1 Solutions

Advanced Financial Accounting

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Solution Summary: The author explains how internal expansion refers to transferring assets and liabilities and in exchange of ownership shares.

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