Concept explainers
a.
To compute: The number of shares issue to acquire Company C.
Introduction: Internal expansion refers to situation in a company forms a subsidiary by transferring some of its assets and liabilities and in exchange of ownership shares. Shares of the subsidiary is either provided to the shareholders in addition to their existing shares (Spin off) or in exchange of their existing shares (split off).
b.
To compute: The total market value of shares issued by Company E.
Introduction: Internal expansion refers to situation in a company forms a subsidiary by transferring some of its assets and liabilities and in exchange of ownership shares. Shares of the subsidiary is either provided to the shareholders in addition to their existing shares (Spin off) or in exchange of their existing shares (split off).
c.
To compute: The fair value of inventory at combination date holds by Company C.
Introduction: Internal expansion refers to situation in a company forms a subsidiary by transferring some of its assets and liabilities and in exchange of ownership shares. Shares of the subsidiary is either provided to the shareholders in addition to their existing shares (Spin off) or in exchange of their existing shares (split off).
d.
To compute: The fair value of identifiable net assets at combination date holds by Company C.
Introduction: Internal expansion refers to situation in a company forms a subsidiary by transferring some of its assets and liabilities and in exchange of ownership shares. Shares of the subsidiary is either provided to the shareholders in addition to their existing shares (Spin off) or in exchange of their existing shares (split off).
e.
To compute: The
Introduction: Internal expansion refers to situation in a company forms a subsidiary by transferring some of its assets and liabilities and in exchange of ownership shares. Shares of the subsidiary is either provided to the shareholders in addition to their existing shares (Spin off) or in exchange of their existing shares (split off).
f.
To compute: The balance in
Introduction: Internal expansion refers to situation in a company forms a subsidiary by transferring some of its assets and liabilities and in exchange of ownership shares. Shares of the subsidiary is either provided to the shareholders in addition to their existing shares (Spin off) or in exchange of their existing shares (split off).
g.
To compute: The amount of
Introduction: Internal expansion refers to situation in a company forms a subsidiary by transferring some of its assets and liabilities and in exchange of ownership shares. Shares of the subsidiary is either provided to the shareholders in addition to their existing shares (Spin off) or in exchange of their existing shares (split off).
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Chapter 1 Solutions
Advanced Financial Accounting
- 1. How much is the fair value of the net assets of Sub? 2. How much is the goodwill/(gain from bargain purchase) at the date of acquisition? 3. How much is the total assets at the date of acquisition?arrow_forward(a) Prepare a consolidated statement of financial position in order of liquidity ie starting with cash at the date of acquisition under each of the following: (i) Identifiable net assets methodarrow_forwardexplain the answerarrow_forward
- please make sure you are using the values in this question because they are differerentarrow_forwardssarrow_forward2) On January 1, 20X5, Peery Company acquired 100 percent of Standard Company's common shares at underlying book value. Peery uses the equity method in accounting for its ownership of Standard. On December 31, 20X5, the trial balances of the two companies are as follows: Item Current Assets Depreciable Assets Investment in Standard Company Other Expenses Depreciation Expense Dividends Declared Accumulated Depreciation Current Liabilities Long-Term Debt Common Stock Retained Earnings Sales Income from Standard Company Peery Company Debit $ 238,000 300,000 100,000 90,000 30,000 32,000 Credit $ 120,000 50,000 120,000 100,000 175,000 200,000 25,000 Standard Company Debit Credit $ 95,000 170,000 70,000 17,000 10,000 $ 790,000 $ 790,000 $362,000 $ 85,000 30,000 50,000 50,000 35,000 112,000 $362,000 Required: 1. Prepare the consolidation entries needed as of December 31, 20X5, to complete a consolidation worksheet. 2. Prepare a three-part consolidation worksheet as of December 31, 20X5.arrow_forward
- odwill to be amortized periodically for 20 years. G. Goodwill to be amortized for 40 years D. Expenses immediately. B. Goodwill not subject to amortization but subject to impairment. 3. Two methods of arranging business combinations: C. Acquisition and uniting of interest D. Merger and acquisition of stocks A/ Merger and consolidation B. Consolidation and Acquisition of stocks . The cost of registering equity securities in a business combination should be recorded as: A. An income of the period B. An expense of the period C. Deduction from additional paid-in capital D. Part of the cost of the stock acquired 5. In acquisition-type combination, the appropriate accounting for the excess of fair values of net assets acquired er the price paid is to: A. Recognize as income in the books of the acquirer B. Recognize as additional paid-in capital in the books of the acquirer blbe C. Reduce proportionately current fair values assigned to the acquiree's non-current assets any remaining excess as…arrow_forwardTopic: Accounting How much is the indirect costs paid by the Parent?arrow_forwardThe December 31, 20x8, balance sheets for Pint Corporation and its 70 percent-owned subsidiary Saloon Company contained the following summarized amounts: Assets Cash and Receivables Inventory Buildings and Equipment (net) Investment in Saloon Company Total Assets Liabilities and Equity Accounts Payable Common Stock Retained Earnings Total Liabilities and Equity PINT CORPORATION AND SALOON COMPANY Balance Sheets December 31, 20x8 view transaction list Consolidation Worksheet Entries A B < Pint acquired the shares of Saloon Company on January 1, 20X7. On December 31, 20X8, assume Pint sold Inventory to Saloon during 20X8 for $105,000 and Saloon sold Inventory to Pint for $309,000. Pint's balance sheet contains Inventory Items purchased from Saloon for $100,000. The Items cost Saloon $60,000 to produce. In addition, Saloon's Inventory contains goods it purchased from Pint for $27,000 that Pint had produced for $16,200. Assume Saloon reported net Income of $72,000 and dividends of $14,400.…arrow_forward
- ABC Corp. acquired all the assets and liabilities of XYZ Corporation by issuing shares of its common stock. On January 1, 2020, partial balance sheet data for the companies prior to the business combination and immediately following the combination is provided. ABC Corp. XYZ Corp. Combination Cash 65,000 25,000 90,000 Accounts receivable 72,000 20,000 94,000 Inventory 33,000 45,000 88,000 PPE (net) 400,000 150,000 650,000 Goodwill ? Total Assets 570,000 240,000 ? Accounts payable 50,000 25,000 75,000 Bonds payable 250,000 100,000 350,000 Common stock, P2 par 100,000 25,000 160,000 Share Premium 65,000 20,000 245,000 Retained earnings 105,000 70,000 ? Total Liab and Equity 570,000 240,000 ? What is the fair value of the net assets held by XYZ Corp at the date of combination? a. 270,000 b. 227,000 c. 497,000 d. 115,000arrow_forwardREQUIRED: Determine the percentage owned by the parentarrow_forwardOn January 1, 20X2, Plend Corporation acquired all of Stork Corporation's assets and liabilities by issuing shares of its common stock. Partial balance sheet data for the companies prior to the business combination and immediately following the combination are as follows: Plend Corporation Stork Corporation Combined Entity Book Value Book Value Assets Cash $ 52,000 $ 22,000 $ 74,000 Accounts Receivable 72,000 42,000 112,000 Inventory 62,000 47,000 120,000 Buildings and Equipment (net) 312,000 122,000 454,000 Goodwill ? Total Assets $ 498,000 $ 233,000 $ ? Liabilities and Equities Accounts Payable $ 44,000 $ 26,000 $ 70,000 Bonds Payable 162,000 82,000 244,000 Bond Premium 6,000 6,000 Common Stock, $5 par 112,000 52,000 139,500 Additional Paid-In Capital 77,000 40,000 335,500 Retained Earnings 97,000 33,000 ? Total Liabilities and Equities $ 498,000 $ 233,000 $ ? Required: What number of shares did Plend issue to acquire…arrow_forward
Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning