Advanced Accounting
12th Edition
ISBN: 9781305084858
Author: Paul M. Fischer, William J. Tayler, Rita H. Cheng
Publisher: Cengage Learning
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Chapter 1, Problem 5.2E
To determine
Introduction: Acquisition is a corporate term used to represent purchase of another company and gaining the ownership of the company.
To provide: Acquisition with
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Avery Company acquires the net assets of Iowa Company on July 1, 2015. The net assets acquired include plant assets that are provisionally estimated to have a fair value of $600,000 with a 10-year usable life and no salvage value. Depreciation is recorded based on months in service. The remaining unallocated amount of the price paid is $300,000, which is recorded as goodwill. At the end of 2015, Avery prepares the following statements (includes Iowa Company for the last six months):In March 2016, the final estimated fair value of the acquired plant assets is $700,000 with no change in the estimate of useful life or salvage value. 1. Prepare any journal entries required inMarch 2016. 2. Prepare the revised balance sheet and income statement for 2015 that will be included in the 2016 comparative statements.
UNDOS COMPANY purchased equipment for P5,000,000 on January 1, 2013 with a useful life of ten years and no residual value. On January 1, 2015, the entity classified the asset as held for sale. The fair value of the equipment of January 1, 2015 is P3,300,000 and the cost of disposal is P100,000. On December 31, 2015, the fair value of the equipment is P3,800,000 and the cost of disposal is P200,000. On December 31, 2015, the entity believed that the criteria for classification as held for sale can no longer be met. Accordingly, the entity decided not to sell the asset but to continue to use it.
What amount should be recognized in profit or loss as a result of the reclassification in 2015?
On August 1, 2017, Riverbed Corporation acquired Marin, Inc. for a cash payment of $2.30 million. At the time of purchase, Marin’s balance sheet showed assets of $4,422,000, liabilities of $2,622,000, and owners’ equity of $1,800,000. The fair value of Marin’s identifiable assets is estimated to be $4,330,000.Compute the amount of goodwill acquired by Riverbed.
Chapter 1 Solutions
Advanced Accounting
Ch. 1 - Prob. 1UTICh. 1 - Prob. 3UTICh. 1 - Prob. 4UTICh. 1 - Prob. 5UTICh. 1 - Prob. 6UTICh. 1 - Prob. 7UTICh. 1 - Prob. 8UTICh. 1 - Prob. 9UTICh. 1 - Prob. 10UTICh. 1 - Prob. 1.1E
Ch. 1 - Prob. 1.2ECh. 1 - Prob. 1.3ECh. 1 - Prob. 2ECh. 1 - Prob. 5.1ECh. 1 - Prob. 5.2ECh. 1 - Prob. 6ECh. 1 - Lake craft Company has the following balance...Ch. 1 - Prob. 8.2ECh. 1 - Prob. 8.3ECh. 1 - Prob. 9.1ECh. 1 - Prob. 9.2ECh. 1 - Prob. 1A.1.1AECh. 1 - Prob. 1A.1.2AECh. 1 - Prob. 1.2PCh. 1 - Prob. 1.3.1PCh. 1 - Prob. 1.4PCh. 1 - Jack Company is a Corporation that was organized...Ch. 1 - Prob. 1.6PCh. 1 - Prob. 1.7.1PCh. 1 - Prob. 1.7.2PCh. 1 - Prob. 1.8PCh. 1 - Prob. 1.10.A1PCh. 1 - Prob. 1.11PCh. 1 - Prob. 1.12PCh. 1 - Prob. 1.13.2PCh. 1 - Prob. 1A.1.1APCh. 1 - Prob. 1A.1.2APCh. 1 - (Note: The use 01 a financial calculator or Excel...Ch. 1 - Frontier does not have publicly traded stock. You...Ch. 1 - Frontier does not have publicly traded stock. You...Ch. 1 - Prob. 1.1B.3CCh. 1 - Prob. 1.1CCCh. 1 - Prob. 1.2.1CCh. 1 - Prob. 1.2.2CCh. 1 - Case 1-2 Disney Acquires Marvel Entertainment On...
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- Comprehensive: Acquisition, Subsequent Expenditures, and Depreciation On January 2, 2019, Lapar Corporation purchased a machine for 50,000. Lapar paid shipping expenses of 500, as well as installation costs of 1,200. The company estimated that the machine would have a useful life of 10 years and a residual value of 3,000. On January 1, 2020, Lapar made additions costing 3,600 to the machine in order to comply with pollution-control ordinances. These additions neither prolonged the life of the machine nor increased the residual value. Required: 1. If Lapar records depreciation expense under the straight-line method, how much is the depreciation expense for 2020? 2. Assume Lapar determines the machine has three significant components as shown below. If Lapar uses IFRS, what is the amount of depreciation expense that would be recorded?arrow_forwardUNO COMPANY purchased equipment for P5,000,000 on January 1, 2013 with a useful life of ten years and no residual value. On January 1, 2015, the entity classified the asset as held for sale. The fair value of the equipment of January 1, 2015 is P3,300,000 and the cost of disposal is P100,000. On December 31, 2015, the fair value of the equipment is P3,800,000 and the cost of disposal is P200,000. On December 31, 2015, the entity believed that the criteria for classification as held for sale can no longer be met. Accordingly, the entity decided not to sell the asset but to continue to use it. What is the measurement of the equipment that ceases as held for sale on December 31, 2015?arrow_forwardOn January 3, 2018, Leni company acquired an item of property, plant and equipment at a cost of P1,000,000. The asset's estimated residual value is P100,000 and estimated useful life of 10 years. The company uses straight-line of depreciation computed to the nearest month. On October 1, 2021, the asset was reclassified as "held for sale". Its fair value on this date was P500,000 and the cost to sell was estimated at P20,000. In January 2022, the asset was sold for P500,000 incurring disposal costs of P10,000 on the sale.How much gain on sale is reported for year 2022?arrow_forward
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