EBK ADVANCED FINANCIAL ACCOUNTING
11th Edition
ISBN: 8220102796096
Author: Christensen
Publisher: YUZU
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Chapter 1, Problem 1.5E
a.
To determine
Introduction: Consolidation is the process of accounting where the books of the parent company are reported along with the books of the subsidiary company in consolidated/combined form after making necessary
b.
To determine
Introduction: Consolidation is the process of accounting where the books of the parent company are reported along with the books of the subsidiary company in consolidated/combined form after making necessary adjustment entries as required in the process of consolidation. Whereas depreciation is a term used to define the decrease in value of an asset due to its wear and tear with time or due to obsolescence.
To Calculate: Journal entry that S Co. recorded for the receipt of assets and issuance of common stock to P Co.
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18.
Power Company purchased Sark Corporation’s net assets on January 3, 20X2, for $635,000 cash. In addition, Power incurred $8,000 of direct costs in consummating the combination. At the time of acquisition, Sark reported the following historical cost and current market data:
Balance Sheet Item
Book Value
Fair Value
Assets
Cash and Receivables
$ 67,000
$ 67,000
Inventory
108,000
154,000
Buildings and Equipment (net)
210,000
305,000
Patent
0
202,000
Total Assets
$ 385,000
$ 728,000
Liabilities and Equities
Accounts Payable
$ 22,000
$ 22,000
Common Stock
92,000
Additional Paid-In Capital
70,000
Retained Earnings
201,000
Total Liabilities and Equities
$ 385,000
Required:
Prepare the journal entry or entries with which Power recorded its acquisition of Sark’s net assets.
A. Record the payment of acquisition costs.
B. Record the acquisition of Sark Corporation's net assets.
On January 1, 20X6, Pumpkin Corporation acquired 70 percent of Spice Company's common stock for $210,000 cash. The
fair value of the noncontrolling interest at that date was determined to be $90,000. Data from the balance sheets of the
two companies included the following amounts as of the date of acquisition:
Cash
Accounts Receivable
Pumpkin
$ 50,000
70,000
Spice
$ 15,000
25,000
Inventory
30,000
20,000
Land
150,000
80,000
Buildings and Equipment
250,000
200,000
Less: Accumulated Depreciation
(70,000)
(20,000)
Investment in Spice Co.
210,000
Total Assets
$690,000
$320,000
Accounts Payable
$ 40,000
$ 10,000
Bonds Payable
150,000
40,000
Common Stock
300,000
90,000
200,000
$690,000
180,000
$320,000
Retained Earnings
Total Liabilities and Equity
At the date of the business combination, the book values of Spice's assets and liabilities approximated fair value except
for inventory, which had a fair value of $30,000, and land, which had a fair value of $95,000.
Based on the preceding…
SFFN Corp. purchased the entire business of AZC, Inc. including all its assets and liabilities for $1,800,000. Below is information related to the two companies:
SFFN
AZC
Fair value of assets
$
3,050,000
$
1,600,000
Fair value of liabilities
2,575,000
800,000
Reported assets
2,800,000
1,400,000
Reported liabilities
2,500,000
750,000
Net Income for the year
460,000
250,000
How much goodwill will SFFN recognize as a result of its acquisition of AZC?
Select one:
a. $-0-
b. $1,225,000
c. $1,150,000
d. $200,000
e. $1,000,000
Chapter 1 Solutions
EBK 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. 1.8QCh. 1 - Prob. 1.9QCh. 1 - Prob. 1.10QCh. 1 - Prob. 1.11Q
Ch. 1 - Prob. 1.12QCh. 1 - Prob. 1.13QCh. 1 - Prob. 1.14QCh. 1 - Prob. 1.15QCh. 1 - Within the measurement period following a business...Ch. 1 - Prob. 1.17QCh. 1 - Prob. 1.1CCh. 1 - Prob. 1.3CCh. 1 - Prob. 1.4CCh. 1 - Risks Associated with Acquisitions Not all...Ch. 1 - Prob. 1.8CCh. 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 - Prob. 1.4.4ECh. 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 - Prob. 1.11ECh. 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 - Prob. 1.27PCh. 1 - Prob. 1.28PCh. 1 - Prob. 1.29PCh. 1 - Prob. 1.30PCh. 1 - Prob. 1.31PCh. 1 - Prob. 1.32PCh. 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
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