Advanced Accounting
14th Edition
ISBN: 9781260247824
Author: Joe Ben Hoyle, Thomas F. Schaefer, Timothy S. Doupnik
Publisher: RENT MCG
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Textbook Question
Chapter 2, Problem 13P
On May 1, Donovan Company reported the following account balances:
| Current assets | $ 90,000 |
| Buildings & equipment (net) | 220,000 |
| Total assets | $310,000 |
| Liabilities | $ 60,000 |
| Common stock | 150,000 |
| 100,000 | |
| Total liabilities and equities | $310,000 |
On May 1, Beasley paid $400,000 in stock (fair value) for all of the assets and liabilities of Donovan, which will cease to exist as a separate entity. In connection with the merger, Beasley incurred $15,000 in accounts payable for legal and accounting fees.
Beasley also agreed to pay $75,000 to the former owners of Donovan contingent on meeting certain revenue goals during the following year. Beasley estimated the present value of its probability adjusted expected payment for the contingency at $20,000. In determining its offer, Beasley noted the following:
- Donovan holds a building with a fair value $30,000 more than its book value.
- Donovan has developed unpatented technology appraised at $25,000, although is it not recorded in its financial records.
- Donovan has a research and development activity in process with an appraised fair value of $45,000. The project has not yet reached technological feasibility.
- Book values for Donovan's current assets and liabilities approximate fair values.
12. What should Beasley record as total liabilities incurred or assumed in connection with the Donovan merger?
-
- a. $15,000
- b. $75,000
- c. $95,000
- d. $150,000
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On May 1, Donovan Company reported the following account balances:
Current assets
$
92,500
Buildings & equipment (net)
240,000
Total assets
$
332,500
Liabilities
$
64,500
Common stock
150,000
Retained earnings
118,000
Total liabilities and equities
$
332,500
On May 1, Beasley paid $425,700 in stock (fair value) for all of the assets and liabilities of Donovan, which will cease to exist as a separate entity. In connection with the merger, Beasley incurred $24,200 in accounts payable for legal and accounting fees.
Beasley also agreed to pay $87,300 to the former owners of Donovan contingent on meeting certain revenue goals during the following year. Beasley estimated the present value of its probability adjusted expected payment for the contingency at $29,900. In determining its offer, Beasley noted the following:
Donovan holds a building with a fair value $30,300 more than its book value.
Donovan has developed unpatented…
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Below is the statement of realization and liquidation of Alex Corporation, which is under receivership for the month ended July 31, 20x5:AssetsAssets acquired: Assets realized:Accounts receivable P20,000 Investment at fair value P24,000Assets to be realized: Assets not realized:Investment at fair value 32,000 Accounts receivable 10,000Accounts receivable 76,000 Merchandise inventory 30,000Merchandise inventory 40,000LiabilitiesLiabilities liquidated: Liabilities to be liquidated:Accounts payable P56,000 Accounts payable P90,000Liabilities not liquidated: Liabilities assumed:Accounts payable 20,000 Accounts payable 16,000Accrued expenses 4,000Supplementary Items Supplementary Expenses Supplementary IncomePurchases P3,000 Sales on account P12,000Expenses 15,000 Cash sales 40,000Interest income 4,000QUESTIONS:9. What is the net income or loss for the period? ______________
Chapter 2 Solutions
Advanced Accounting
Ch. 2 - Prob. 1QCh. 2 - Describe the concept of a synergy. What are some...Ch. 2 - Prob. 3QCh. 2 - What does the term consolidated financial...Ch. 2 - Within the consolidation process, what is the...Ch. 2 - Prob. 6QCh. 2 - Prob. 7QCh. 2 - Prob. 8QCh. 2 - Prob. 9QCh. 2 - Prob. 10Q
Ch. 2 - Prob. 11QCh. 2 - Prob. 12QCh. 2 - Which of the following does not represent a...Ch. 2 - Prob. 2PCh. 2 - Prob. 3PCh. 2 - Prob. 4PCh. 2 - Prob. 5PCh. 2 - Prob. 6PCh. 2 - Prob. 7PCh. 2 - When does gain recognition accompany a business...Ch. 2 - Prob. 9PCh. 2 - Prob. 10PCh. 2 - Prob. 11PCh. 2 - On June 1, Cline Co. paid 800,000 cash for all of...Ch. 2 - On May 1, Donovan Company reported the following...Ch. 2 - Prob. 14PCh. 2 - Prob. 15PCh. 2 - Prob. 16PCh. 2 - Prob. 17PCh. 2 - On its acquisition-date consolidated balance...Ch. 2 - On its acquisition-date consolidated balance...Ch. 2 - Prob. 20PCh. 2 - Prob. 21PCh. 2 - Prob. 22PCh. 2 - The following book and fair values were available...Ch. 2 - Prob. 24PCh. 2 - Prob. 25PCh. 2 - Prob. 26PCh. 2 - Prob. 27PCh. 2 - Prob. 28PCh. 2 - SafeData Corporation has the following account...Ch. 2 - Prob. 34PCh. 2 - Prob. 35PCh. 2 - Prob. 39APBCh. 2 - Prob. 40APB
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