Advanced Accounting
12th Edition
ISBN: 9781305084858
Author: Paul M. Fischer, William J. Tayler, Rita H. Cheng
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 2, Problem 2.13.2P
To determine
Business combination:
Business combination refers to the combining of one or more business organizations in a single entity. The business combination leads to the formation of combined financial statements. After the business combination, the entities having separate control merges into one. They then have a control over all the assets and liabilities. Merging and acquisition are types of business combinations.
Consolidated financial statements:
The consolidated financial statements refer to the combined financial statements of the entities which are prepared at the year-end. The consolidated financial statements are prepared when one organization is either acquired by the other entity or two organizations merge to form the new entity. The consolidated financial statements serve the purpose of financial information for/about both the entities.
:
To complete: a consolidated worksheet for Company P and Company S as of December 31, 2015.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Born Corporation agrees to acquire the net assets ofWren Corporation on January 1, 2015.Wren has the following balance sheet on the date of acquisition:An appraiser determines that in-process R&D exists and has an estimated value of $20,000. The appraisal indicates that the following assets have fair values that differ from their book values: Fair ValueInventory . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 98,000Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . 340,000Trademark . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000Use value analysis to prepare the entry on the books of Born Corporation to acquire the net assets ofWren Corporation under each of the following purchase price scenarios:1. Purchase price is $540,000.2. Purchase price is $350,000.
Anton Company acquired the net assets of Hair Company on January 1, 2015, for $600,000. Using a business valuation model, the estimated value of Anton Company was $650,000 immediately after the acquisition. The fair value of Anton’s net assets was $400,000. 1. What amount of goodwill was recorded by Anton Company when it acquired Hair Company?2. Using the information, answer the questions posed in the following two independent situations: a. On December 31, 2016, there were indications that goodwill might have been impaired. At that time, the existing recorded book value of Anton Company’s net assets, including goodwill, was $500,000. The fair value of the net assets, exclusive of goodwill, was estimated to be $340,000. The value of the business was estimated to be $520,000. Is goodwill impaired? If so, what adjustment is needed? b. On December 31, 2018, there were indications that goodwill might have been impaired. At that time, the existing recorded book value of Anton Company’s net…
Tweeden Corporation is contemplating the acquisition of the net assets of Sylvester Corporation in anticipation of expandingits operations. The balance sheet of Sylvester Corporation on December 31, 2015, is as attached:n appraiser for Tweeden determined the fair values of Sylvester’s assets and liabilities to be as shown as in attachment 2The agreed-upon purchase price is $580,000 in cash. Acquisition costs paid in cash total $20,000.Using the above information, do value analysis and prepare the entry on the books of Tweeden Corporation to acquire the net assets of Sylvester Corporation on December 31, 2015.
Chapter 2 Solutions
Advanced Accounting
Ch. 2 - Prob. 1UTICh. 2 - Prob. 2UTICh. 2 - Prob. 3UTICh. 2 - Prob. 4UTICh. 2 - Prob. 5UTICh. 2 - Prob. 6UTICh. 2 - Santos Corporation is considering investing in...Ch. 2 - Prob. 2.1ECh. 2 - Prob. 2.2ECh. 2 - Prob. 3.1E
Ch. 2 - Prob. 3.2ECh. 2 - Prob. 4.1ECh. 2 - Prob. 4.2ECh. 2 - Prob. 4.3ECh. 2 - Prob. 5.1ECh. 2 - Prob. 5.2ECh. 2 - Prob. 6.1ECh. 2 - Prob. 6.2ECh. 2 - Prob. 7.1ECh. 2 - Prob. 7.2ECh. 2 - Prob. 8.1ECh. 2 - Prob. 9.1ECh. 2 - Prob. 9.2ECh. 2 - Prob. 9.4ECh. 2 - Prob. 2A.1AECh. 2 - Prob. 2.1.1PCh. 2 - Prob. 2.1.2PCh. 2 - Prob. 2.2.1PCh. 2 - Prob. 2.2.2PCh. 2 - Prob. 2.2.3PCh. 2 - Prob. 2.3.1PCh. 2 - Prob. 2.3.2PCh. 2 - Prob. 2.3.3PCh. 2 - Prob. 2.4.1PCh. 2 - Prob. 2.4.2PCh. 2 - Prob. 2.4.3PCh. 2 - Prob. 2.5.1PCh. 2 - Prob. 2.5.2PCh. 2 - Prob. 2.5.3PCh. 2 - Prob. 2.6.1PCh. 2 - Prob. 2.6.2PCh. 2 - Prob. 2.7.1PCh. 2 - Prob. 2.7.2PCh. 2 - Prob. 2.8.1PCh. 2 - Prob. 2.8.2PCh. 2 - Prob. 2.9.1PCh. 2 - Prob. 2.9.2PCh. 2 - Prob. 2.10.1PCh. 2 - Prob. 2.11.1PCh. 2 - Prob. 2.12.1PCh. 2 - Prob. 2.12.2PCh. 2 - Prob. 2.13.1PCh. 2 - Prob. 2.13.2PCh. 2 - Prob. 2.14.1PCh. 2 - Prob. 2.14.2PCh. 2 - Prob. 2.15.1PCh. 2 - Prob. 2.15.2PCh. 2 - Prob. 2A.1.1APCh. 2 - Prob. 2A.1.2APCh. 2 - Prob. 2.1.1CCh. 2 - Prob. 2.1.2C
Knowledge Booster
Similar questions
- 3arrow_forwardWhat are the answers to Required 1a (goodwill amortization Journal Entry(, 1b (amortization of patent Journey Entry), 1c (amortization of franchise Journal Entry), and to Required 2 (fill in the Partial Balance Sheet)?arrow_forwardOn January 1, 2025, Lili Company acquired the identifiable net assets of Jen Inc. On this date, the identifiable assets acquired and liabilities assumed have fair values of P 7,680,000 and P4,320,000 respectively. Lili Co. incurred the following acquisition related costs: legal fees, P48,000; due diligence costs, P48,000; and general and administrative costs of maintaining an internal acquisition, P96,000. As consideration, Lili Co. transferred 9,600 of its own shares with par value and fair value per share of P400 and P500 respectively, too Jen's former owners. Costs of registering the shares (previously issued and newly issued) amounted to P192,000 (P24,000 pertains to listing fees of previously issued shares). How much is the total amount charged to profit or loss in relation to the transaction above?arrow_forward
- Hoolia Corporation acquires equipment and patents from another company for $50 million and records the acquisition as an asset acquisition. The equipment has a fair value of $19.20 million and the patents have a fair value of $28.80 million. Neither asset is nonqualifying. At what value does Hoolia record the equipment? Select one: a. $25.0 million b. $20.0 million c. $21.2 million d. $19.2 millionarrow_forwardQuestions 1. Assuming at the date of acquisition, the fair value of all the assets of CONVEX Ltd. were the same as their carrying amounts with the exception of one of its equipment. This had a fair value of $2million. The book value of this equipment was $1.6 million before the acquisition. As a result of the fair valuation, the useful life of the equipment has been reviewed to 10 years remaining life. How will you treat this? 2. Assuming at the acquisition date, CONVEX Ltd. paid $20 million cash and promised to pay additional $2 million if the vaccine production is successful. However, the value of net assets of CONCAVE Ltd. was just $16 million. How will you treat this in account?arrow_forwardUse the following information for the next two (2) questions: The Malaluan Company accounts for non-current assets, using the revaluation model. On June 30, 2016 Malaluan classified a freehold property as held for sale in accordance with PFRS5. At the date the property's carrying amount was P290,000. At that date its fair value was estimated at P330,000 and the costs to sell at P20,000. At December 31, 2016 the property's fair value was estimated at P325,000 and the costs to sell at P25,000. 13) The asset should be carried in Malaluan's statement of financial position at December 31, 2016 at 14) What amount should be included as an impairment loss in Malaluan's statement of comprehensive income for the year ended December 31, 2016?arrow_forward
- On September 1, 2018, Vernon Corporation acquired Barlow Enterprises for a cash payment of $820.000. At the time of purchases. Barlow's balance sheet showed assets of $610.000. liabilities of $240.000, and owner's equity of $420.000. The fair value of Barlow's assets is estimated to be 5970.000.The liabilities are all estimated to be at fair value. a) Compute the amount of goodwill acquired by Vernon. 120000 b) On December 31, 2020, the fair value of Barlow as a reporting unit is estimated to be $720.000. The carrying value of Vernon's investment in Barlow at year-end is $750.000. The fair value of Barlow's identifiable net asset, excluding the goodwill, is determined to be 655.000 Prepare Vernon's journal entry, if necessary, to record impairment of goodwill. Please use the new standard (Hint: The FASB's new goodwill Impairment testing guidance- ASU 2017-04 is required for public SEC filers for periods beginning after December 15. 2019) Note: Please use integer only. Do not use a S.…arrow_forwardThe following information concerns the intangible assets of Epstein Corporation: a. On June 30, 2016, Epstein completed the acquisition of the Johnstone Corporation for $2,000,000 in cash. The fair value of the net identifiable assets of Johnstone was $1,700,000. b. Included in the assets purchased from Johnstone was a patent that was valued at $80,000. The remaining legal life of the patent was 13 years, but Epstein believes that the patent will only be useful for another eight years. c. Epstein acquired a franchise on October 1, 2016, by paying an initial franchise fee of $200,000. The contractual life of the franchise is 10 years. Required: 1. Prepare year-end adjusting journal entries to record amortization expense on the intangibles at December 31, 2016. 2. Prepare the intangible asset section of the December 31, 2016, balance sheet.arrow_forwardarizona corp. acquired the business data systems for $320,000 cash and assumed all liabilites at the data of purchase. data's books showed tangible assets of $340,000, liabilities of $19,000, and stockholders' equity of $321,000. an appraiser assessed the fair market value of the tangible assets at $310,000 at the data of acquisition. a. compute the amount of goodwill acquired. b. record the acquisition in a financial statements model. Arizona corps. financial condition just prior to the aquistion is shown in the following statements model. cash paid- liabilites assumed- total- FMV of assets- goodwill-arrow_forward
- Carla Vista Company is considering the acquisition of Kingbird, Inc. To assess the amount it might be willing to pay, Carla Vista makes the following computations and assumptions. A. B. C. Kingbird, Inc. has identifiable assets with a total fair value of $6,016,000 and liabilities of $3,719,000. The assets include office equipment with a fair value approximating book value, buildings with a fair value 25% higher than book value, and land with a fair value 50% higher than book value. The remaining lives of the assets are deemed to be approximately equal to those used by Kingbird, Inc. Kingbird, Inc.'s pretax incomes for the years 2020 through 2022 were $472,100, $573,300, and $372,700, respectively. Carla Vista believes that an average of these earnings represents a fair estimate of annual earnings for the indefinite future. However, it may need to consider adjustments for the following items included in pretax earnings: Depreciation on Buildings (each year) Depreciation on Equipment…arrow_forwardOn 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.arrow_forwardShak Company acquired a financial instrument for P4,000,000 on March 31, 2020. The financial instrument is classified as financial asset at fair value through other comprehensive income. The direct acquisition cost incurred amounted to P700,000. On December 31, 2020, the fair value of the instrument was P5,500,000 and the transaction costs that would be incurred on the sale of the investment are estimated at P600,000. What gain should be recognized in statement of financial position for the year ended December 31, 20207 Select the correct response 900,000 200,000 800,000arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Financial Reporting, Financial Statement Analysis...FinanceISBN:9781285190907Author:James M. Wahlen, Stephen P. Baginski, Mark BradshawPublisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Financial Reporting, Financial Statement Analysis...
Finance
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:Cengage Learning