Fundamentals of Advanced Accounting
6th Edition
ISBN: 9780077862237
Author: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik
Publisher: McGraw-Hill Education
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Question
Chapter 2, Problem 23P
a.
To determine
Prepare Company Z’s
b.
To determine
Prepare Company Z’s journal entries to record the Company S’s acquisition assuming its initial cash payment to the former owners was $800,000.
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On May 1, Soriano Co. reported the following account balances along with their estimated fair values:
Carrying Amount
Fair Value
Receivables
$
221,500
$
221,500
Inventory
81,000
81,000
Copyrights
131,500
496,500
Patented technology
834,000
610,000
Total assets
$
1,268,000
$
1,409,000
Current liabilities
$
186,000
$
186,000
Long-term liabilities
714,000
704,000
Common stock
100,000
Retained earnings
268,000
Total liabilities and equities
$
1,268,000
On that day, Zambrano paid cash to acquire all of the assets and liabilities of Soriano, which will cease to exist as a separate entity. To facilitate the merger, Zambrano also paid $148,500 to an investment banking firm.
The following information was also available:
Zambrano further agreed to pay an extra $73,000 to the former owners of Soriano only if they meet certain revenue goals during the…
On May 1, Soriano Co. reported the following account balances along with their estimated fair values:
Carrying
Amount
Fair Value
151,000
80,000
587,000
652,000
1,470,000
Receivables
151,000
80,000
Inventory
Copyrights
Patented technology
168,000
855,000
$ 1, 254,000
Total assets
237,000 $
694,000
100,000
223,000
Current liabilities
237,000
Long-term liabilities
Common stock
681, 000
Retained earnings
Total liabilities and equities
$ 1,254,000
On that day, Zambrano paid cash to acquire all of the assets and liabilities of Soriano, which will cease to exist as a separate entity. To
facilitate the merger, Zambrano also paid $105,000 to an investment banking firm.
The following information was also available:
• Zambrano further agreed to pay an extra $82,400 to the former owners of Soriano only if they meet certain revenue goals during
the next two years. Zambrano estimated the present value of its probability adjusted expected payment for this contingency at
$41,200.
Soriano has a…
On May 1, Soriano Company reported the following account balances along with their estimated fair values:
Fair Value
Carrying Amount
$ 196,000
85,000
171,000
874,000
Receivables
Inventory
Copyrights
Patented technology
Total assets
Current liabilities
Long-term liabilities
Common stock
Retained earnings
Total liabilities and equities
Items
View transaction list
$ 1,326,000
$216,000
742,000
100,000
268,000
$ 1,326,000
4
On that day, Zambrano paid cash to acquire all of the assets and liabilities of Soriano, which will cease to exist as a separate entity. To
facilitate the merger, Zambrano also paid $125,500 to an investment banking firm.
The following information was also available:
. Zambrano further agreed to pay an extra $78,200 to the former owners of Soriano only if they meet certain revenue goals during
the next two years. Zambrano estimated the present value of its probability adjusted expected payment for this contingency at
$39.100.
• Soriano has a research and development…
Chapter 2 Solutions
Fundamentals of Advanced Accounting
Ch. 2 - Prob. 1QCh. 2 - Prob. 2QCh. 2 - What does the term consolidated financial...Ch. 2 - Within the consolidation process, what is the...Ch. 2 - Prob. 5QCh. 2 - Prob. 6QCh. 2 - Prob. 7QCh. 2 - Prob. 8QCh. 2 - Prob. 9QCh. 2 - Prob. 10Q
Ch. 2 - Prob. 11QCh. 2 - Which of the following does not represent a...Ch. 2 - Prob. 2PCh. 2 - Prob. 3PCh. 2 - Prob. 4PCh. 2 - Prob. 5PCh. 2 - An acquired entity has a long-term operating lease...Ch. 2 - When does gain recognition accompany a business...Ch. 2 - Prob. 8PCh. 2 - Prob. 9PCh. 2 - Prob. 10PCh. 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. 13PCh. 2 - Prob. 14PCh. 2 - Prob. 15PCh. 2 - Prob. 16PCh. 2 - On its acquisition-date consolidated balance...Ch. 2 - On its acquisition-date consolidated balance...Ch. 2 - Prob. 19PCh. 2 - The following book and fair values were available...Ch. 2 - Prob. 21PCh. 2 - Prob. 22PCh. 2 - Prob. 23PCh. 2 - Prob. 24PCh. 2 - Prob. 25PCh. 2 - Prob. 26PCh. 2 - Prob. 27PCh. 2 - Prob. 28PCh. 2 - Prob. 29PCh. 2 - SafeData Corporation has the following account...Ch. 2 - Prob. 31PCh. 2 - Prob. 32PCh. 2 - Prob. 33APCh. 2 - On February 1, Piscina Corporation completed a...Ch. 2 - Prob. 1DYSCh. 2 - Prob. 2DYSCh. 2 - Prob. 3DYS
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- On May 1, Soriano Company reported the following account balances along with their estimated fair values: Items Receivables Inventory Copyrights Patented technology Total assets Current liabilities Long-term liabilities Common stock Carrying Amount $ 143,600 76,400 Fair Value $ 143,600 76,400 577,000 753,000 136,000 913,000 $ 1,550,000 $ 197,000 658,300 0 Retained earnings Total liabilities and equities $ 1,269,000 $ 197,000 676,000 100,000 296,000 $ 1,269,000 0 0 On that day, Zambrano paid cash to acquire all of the assets and liabilities of Soriano, which will cease to exist as a separate entity. To facilitate the merger, Zambrano also paid $141,000 to an investment banking firm. The following information was also available: • • Zambrano further agreed to pay an extra $85,000 to the former owners of Soriano only if they meet certain revenue goals during the next two years. Zambrano estimated the present value of its probability adjusted expected payment for this contingency at…arrow_forwardDengerarrow_forwardOn June 1, Cline Co. paid $870,000 cash for all of the issued and outstanding common stock of Renn Corp. The carrying amounts for Renn’s assets and liabilities on June 1 follow: Cash $ 239,000 Accounts receivable 181,000 Capitalized software costs 340,000 Goodwill 103,000 Liabilities (226,000 ) Net assets $ 637,000 On June 1, Renn’s accounts receivable had a fair value of $136,000. Additionally, Renn’s in-process research and development was estimated to have a fair value of $253,000. All other items were stated at their fair values. On Cline’s June 1 consolidated balance sheet, how much is reported for goodwill? Multiple Choice $340,000. $20,000. $128,000. $83,000.arrow_forward
- Carmela Company, as of December 31, 2021 provided the following balances: Cash, net of a P7,000 overdraft 80,000 Receivable, net of customer credit balances totaling P6,000 30,000 Inventory (P20,000 of which are held on consignment) 60,000 Prepayments 10,000 Property, plant and equipment, net of accumulated depreciation of P15,000 90,000 Accounts payable net of debit balances in suppliers’ accounts of P3,000 45,000 Notes payable – bank, due on July 2022 25,000 Income tax payable 15,000 Total current assets reported in the December 31, 2021 balance sheet isarrow_forwardABC Company, as of December 31, 2021 provided the following balances: Cash, net of a P7,000 overdraft 80,000 Receivable, net of customer credit balances totaling P6,000 30,000 Inventory (P20,000 of which are held on consignment 60,000 Prepayments 10,000 Property, plant and equipment, net of accumulated depreciation of P15,000 90,000 Accounts payable net of debit balances in suppliers' accounts of P3,000 45,000 Notes payable – bank, due on July 2022 25,000 Income tax payable 15,000 17. Total current assets reported in the December 31, 2021 balance sheet is a. 176,000 b. 156,000 c. 173,000 d. 170,000arrow_forwardFollowing are preacquisition financial balances for Padre Company and Sol Company as of December 31. Also included are fair values for Sol Company accounts. PadreCompany Sol Company Book Values Book Values Fair Values 12/31 12/31 12/31 Cash $ 159,000 $ 45,550 $ 45,550 Receivables 277,500 380,000 380,000 Inventory 437,500 289,000 348,200 Land 700,000 213,000 188,500 Building and equipment (net) 752,500 274,000 336,700 Franchise agreements 311,000 273,000 304,800 Accounts payable (352,000 ) (179,000 ) (179,000 ) Accrued expenses (109,000 ) (42,250 ) (42,250 ) Longterm liabilities (932,500 ) (640,000 ) (640,000 ) Common stock—$20 par value (660,000 ) Common stock—$5 par value (210,000 ) Additional paid–in…arrow_forward
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