Concept explainers
a.
Concept Introduction:
Consolidation: Merger is a combination where two entities merge to take the benefit of synergies where and assets and liabilities of the two entities combine to form a new entity.
the number of shares did P issue to acquire Stork’s assets and liabilities.
a.
Answer to Problem 1.38P
The number of shares issued is
Explanation of Solution
Computation of a number of shares issued:
b.
Concept Introduction:
Consolidation: Merger is a combination where two entities merge to take the benefit of synergies where and assets and liabilities of the two entities combine to form a new entity.
the total market value of the shares issued by P.
b.
Answer to Problem 1.38P
The total market value of the shares issued by P is
Explanation of Solution
Computation of the total market value of the shares issued:
c.
Concept Introduction:
Consolidation: Merger is a combination where two entities merge to take the benefit of synergies where and assets and liabilities of the two entities combine to form a new entity.
the fair value of inventory held by S at the date of combination.
c.
Answer to Problem 1.38P
The fair value of inventory held by Stork at the date of combination is
Explanation of Solution
Computation of fair value of inventory held:
d.
Concept Introduction:
Consolidation: Merger is a combination where two entities merge to take the benefit of synergies where and assets and liabilities of the two entities combine to form a new entity.
the fair value of identifiable net assets held by Stork at the date of combination.
d.
Answer to Problem 1.38P
The fair value of identifiable net assets held by Stork at the date of combination is
Explanation of Solution
Computation of the fair value of identifiable net assets held:
| Particulars | Amount | |
| Cash | ||
| Inventory | ||
| Building and Equipment (Net) | ||
| Accounts Payable | ||
| Bonds Payable | ||
| Bonds Premium | ||
| Net Assets of Combined Entity | ||
| Cash | ||
| Accounts Receivable | ||
| Inventory | ||
| Building and Equipment (Net) | ||
| Accounts Payable | ||
| Bonds Payable | ||
| Bonds Premium | ||
| Net Assets of P Inc. | ||
| Net Assets of S Company |
e.
Concept Introduction:
Consolidation: Merger is a combination where two entities merge to take the benefit of synergies where and assets and liabilities of the two entities to combine to form a new entity.
the amount of
e.
Answer to Problem 1.38P
The amount of goodwill is
Explanation of Solution
Computation of fair value of identifiable net assets held:
Total Market Value of shares of P Inc. LessNet Assets of S Company
f.
Concept Introduction:
Consolidation: Merger is a combination where two entities merge to take the benefit of synergies where and assets and liabilities of the two entities to combine to form a new entity.
the balance in
f.
Answer to Problem 1.38P
The balance in retained earnings to be reported is
Explanation of Solution
The number is reported in its financial statement by P Inc. of
g.
Concept Introduction:
Consolidation: Merger is a combination where two entities merge to take the benefit of synergies where and assets and liabilities of the two entities combine to form a new entity.
the amount of
g.
Answer to Problem 1.38P
The balance in retained earnings to be reported is
Explanation of Solution
Computation of depreciation amount:
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Chapter 1 Solutions
Advanced Financial Accounting
- Financial Accountingarrow_forwardA company has an annual demand for.... please answer the financial accounting questionarrow_forwardOn July 1, 2022, Burrough Company acquired 88,000 of the outstanding shares of Carter Company for $13 per share. This acquisition gave Burrough a 25 percent ownership of Carter and allowed Burrough to significantly influence the investee's decisions. As of July 1, 2022, the investee had assets with a book value of $3 million and liabilities of $74,400. At the time, Carter held equipment appraised at $364,000 more than book value; it was considered to have a seven-year remaining life with no salvage value. Carter also held a copyright with a five-year remaining life on its books that was undervalued by $972,000. Any remaining excess cost was attributable to an indefinite-lived trademark. Depreciation and amortization are computed using the straight-line method. Burrough applies the equity method for its investment in Carter. Carter's policy is to declare and pay a $1 per share cash dividend every April 1 and October 1. Carter's income, earned evenly throughout each year, was $598,000 in…arrow_forward
