Soft Bound Version for Advanced Accounting 13th Edition
13th Edition
ISBN: 9781260110579
Author: Hoyle
Publisher: McGraw Hill Education
expand_more
expand_more
format_list_bulleted
Question
Chapter 2, Problem 25P
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.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
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
Soft Bound Version for Advanced Accounting 13th Edition
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 - Problems 19 and 20 are based on the following...Ch. 2 - In the December 31, 2017, consolidated balance...Ch. 2 - Prob. 21PCh. 2 - The following book and fair values were available...Ch. 2 - Prob. 23PCh. 2 - Prob. 24PCh. 2 - Prob. 25PCh. 2 - Prob. 26PCh. 2 - Prob. 27PCh. 2 - Prob. 28PCh. 2 - Prob. 29PCh. 2 - Prob. 30PCh. 2 - Prob. 31PCh. 2 - SafeData Corporation has the following account...Ch. 2 - Prob. 33PCh. 2 - Prob. 34PCh. 2 - Prob. 35APACh. 2 - On February 1, Piscina Corporation completed a...Ch. 2 - Prob. 37APBCh. 2 - Prob. 38APBCh. 2 - Prob. 1DYSCh. 2 - Prob. 2DYSCh. 2 - Prob. 3DYSCh. 2 - Prob. 4DYS
Knowledge Booster
Similar questions
- 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
- Following 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 capital (70,000 ) (90,000 ) Retained earnings, 1/1 (455,000 ) (288,000 ) Revenues (1,049,000 ) (359,300 ) Expenses 990,000…arrow_forwardFollowing are preacquisition financial balances for Padre Company and Sol Company as of December 31. Also included are fair values for Sol Company accounts. Cash Padre Company Book Values 12/31 $ 193,250 Sol Company Book Values 12/31 $ 72,900 Fair Values 12/31 $ 72,900 Items Receivables 228,000 369,000 369,000 Inventory 602,500 190,000 242,200 Land 765,000 195,000 166,200 Building and equipment (net) 765,000 271,000 340,000 Franchise agreements 224,000 216,000 249,900 Accounts payable (350,000) (138,000) (138,000) Accrued expenses (119,000) (47,500) (47,500) Long-term liabilities Common stock-$5 par value Additional paid-in capital Retained earnings, 1/1 Revenues (995,000) (552,500) (552,500) Common stock-$20 par value (660,000) 0 0 0 (210,000) (70,000) (90,000) 0 0 Expenses (522,500) (1,041,250) 980,000 (251,000) 0 (352,900) 0 328,000 0 Note: Parentheses indicate a credit balance. On December 31, Padre acquires Sol's outstanding stock by paying $108,000 in cash and issuing 17,000…arrow_forwardThe following are selected account balances from Penske Company and Stanza Corporation as of December 31, 2024: Revenues Accounts Cost of goods sold Depreciation expense Investment income Dividends declared Retained earnings, 1/1/24 Current assets Copyrights Royalty agreements Penske $ (812,000) 289,200 223,000 Not given 80,000 (708,000) 448,000. 978,000 626,000 Stanza $ (680,000) 170,000 204,000 0 60,000 (270,000) 632,000 378,500 Investment in Stanza Liabilities Common stock Additional paid-in capital 1,048,000 Not given (506,000) 0 (1,262,500) (600,000) ($20 par) (150,000) (200,000) ($10 par) (80,000) Note: Parentheses indicate a credit balance. On January 1, 2024, Penske acquired all of Stanza's outstanding stock for $762,000 fair value in cash and common stock. Penske also paid $10,000 in stock issuance costs. At the date of acquisition, copyrights (with a six-year remaining life) have a $466,000 book value but a fair value of $622,000. Required: a. As of December 31, 2024, what is…arrow_forward
- Pax Limited showed the following assets and liabilities in its financial statements at 31 December 2018. DETAILS CARRYING AMOUNT FAIR VALUE PPE 10,000,000 14,000,000 Inventory 4,200,000 4,400,000 Long Term Loans (3,500,000) (3,500,000) Account Payable (2,500,000) (2,500,000) 8,200,000 12,400,000 The current market rate for similar transactions is 8.5% per annum. Chelsea Limited planned to acquire all the assets and liabilities of Pax Limited on 1 July 2018 and agreed to pay R13,400,000 in cash on 1 July 2019 in full settlement of the acquisition. Required: Calculate the purchase consideration. Calculate the goodwill or bargain purchase for this transaction. Prepare the journal entries required in the books of Chelsea Limited relating to this transaction.arrow_forwardThe trial balance of Manhawk Ltd as at 30 June 2010 disclosed: Cash at bank $ 13,000 Accounts receivable 67,200 Inventory (at cost) 52,100 Land & buildings (at director's valuations) 1,400,000 Fixtures & fittings (at cost) 212,000 Investments (at market value) 85,000 Goodwill (at cost) 50,000 Patents (at cost) 15,000 Deferred tax asset 9,000 Allowance for doubtful debts $ 3,100 Accounts payable 51,500 Accrued expenses 2,500 Accumulated depreciation - buildings 90,000 Accumulated depreciation - fixtures & fittings 82,500 Accumulated impairment - goodwill 20,000 Taxation payable 42,000 Deferred tax liability 5,200 Unsecured notes 250,000 Mortgage 500,000 Provision for long service leave 25,000 General reserve 100,000 Asset revaluation reserve 85,000…arrow_forwardThe following are selected account balances from Penske Company and Stanza Corporation as of December 31, 2024: Accounts Revenues Cost of goods sold Depreciation expense Investment income Dividends declared Retained earnings, 1/1/24 Current assets Copyrights Royalty agreements Investment in Stanza Liabilities Penske $ (845,000) 300,750 160,000 Not given 80,000 (614,000) 438,000 920,000 634,000 Not given (532,000) (600,000) ($20 par) (150,000) Common stock Additional paid-in capital Note: Parentheses Indicate a credit balance. a. Consolidated copyrights b. Consolidated net income c. Consolidated retained earnings d. Consolidated goodwill Stanza $ (528,000) 132,000 228,000 0 60,000 (254,000) 552,000 410,000 1,076,000 Amounts 0 (1,396,000) On January 1, 2024, Penske acquired all of Stanza's outstanding stock for $829,000 fair value in cash and common stock. Penske also paid $10,000 in stock Issuance costs. At the date of acquisition, copyrights (with a six-year remaining life) have a…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education