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-ACCESS
- please answer within the format by providing formula the detailed workingPlease provide answer in text (Without image)Please provide answer in text (Without image)Please provide answer in text (Without image)arrow_forwardHow much is the total assets at the date of acquistion ?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_forward
- 2) 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_forwardplease make sure you are using the values in this question because they are differerentarrow_forwardRequired information On January 1, 20X2, Power Company acquired 80 percent of Strong Company's outstanding stock for cash. The fair value of the noncontrolling interest was equal to a proportionate share of the book value of Strong Company's net assets at the date of acquisition. Selected balance sheet data at December 31, 20X2 are as follows: Total Assets Liabilities Common Stock Retained Earnings Total Liabilities & Stockholders' Equity Multiple Choice O $35,200 Based on the preceding information, what amount should be reported as noncontrolling interest in net assets in Power Company's December 31, 20X2, consolidated balance sheet? $48,200 $76,800 Power $ 564,000 O $112,800 180,000 150,000 234,000 $ 564,000 Strong $ 216,000 65,000 80,000 96,000 $ 241,000arrow_forward
- 1. Matray acquired 16,000 ordinary shares of Petros on 1 April 20X9. On 31 December 20X8Petros’s accounts showed a share premium of $4,000 and retained earnings of $15,000. The fairmarket value of non-controlling interest at acquisition was $7,000.Below are the statements of financial position for the two companies as at 31 December 20X9:Matray PetrosNon-current assets:Property, plant and equipment 39,000 33,000Investment in Petros 50,000Current assets 78,000 40,000Total assets 167,000 73,000Equity and liabilitiesEquityOrdinary shares of: $1 each 100,000: 50c each 10,000Share premium 7,000 4,000Retained earnings 40,000 39,000Current liabilities 20,000 20,000Total equity and liabilities 167,000 73,000Required:Prepare the consolidated statement of financial position of Matray as at 31 December 20X9. Assumeprofits have accrued evenly throughout the yeararrow_forwardREQUIRED: Determine the percentage owned by the parentarrow_forwardUse the following information in answering the next item(s): IRON MAN CORP. acquired 80% of RUST CORP.'s outstanding shares. The statements of financial position of both entities immediately after the acquisition are shown below: IRON MAN CORP. 430,000 1,570,000 2,000,000 RUST CORP. Investment in subsidiary (at cost) 750,000 750,000 Other assets Assets Liabilities Ordinary share capital Retained earnings Liabilities and Stockholders' equity At the date of purchase, the fair value of RUST's assets was P50,000 more than the aggregate carrying amounts. Non-controlling interest is measured under the proportionate share method. 750,000 1,000,000 250,000 2,000,000 400,000 310,000 40,000 750,000 8. How much is the goodwill in the consolidated balance sheet prepared immediately after the acquisition? 110,000 120,000 С. 140,000 160,000 А. В. D. 9. In the consolidated balance sheet prepared immediately after the acquisition, the consolidated total assets should amount to: 2,910,000 2,480,000 C.…arrow_forward
- How much is the Consolidated Shareholder's Equity on December 31, 2022?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_forwardCompany A purchased a certain number of Company B's outstanding voting shares at $25 per share as a long-term investment. Company B had outstanding 32,000 shares of $12 par value stock. Complete the following table relating to the measurement and reporting by Company A after acquisition of the shares of Company B stock. Required: a. What level of ownership by Company A of Company B is required to apply the method? b. What events should cause Company A to recognize revenue related to the investment in Company B? c. After the acquisition date, how should Company A change the balance of the investment account with respect to the stock owned in Company B (other than for the disposal of the investments)? Additional information: Net income reported by Company B in the first year Dividends declared by Company B in the first year Market price of Company B stock at the end of the first year d. At acquisition, the investment account on the books of Company A should be debited for what amount? e.…arrow_forward
