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 business combination, the entities having separate control merges into one having control over all the assets and liabilities. Mergers 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 merged to form the new entity. The consolidated financial statements serve the purpose of both the entities about financial information.
Value analysis:
The value analysis in a business combination is an essential part of determining the worth of the acquired entity. The
:
Preparation of the value analysis and the determination and distribution of excess schedule.
Want to see the full answer?
Check out a sample textbook solution
Chapter 2 Solutions
ADVANCED ACCOUNTING
- Show the solution in good accounting formarrow_forwardAt the time of acquisition X & Y Co., stock issue expected cost expenses OMR 48,000. Finally, acquisition cost was OMR 64,000. How much will record in the income statement. Select one: a. OMR 48,000 b. OMR 64,000 c. OMR 16,000 d. OMR 112,000arrow_forwarda. calculate the purchase consideration b. calculate the goodwill or bargain purchase for this transaction c. Prepare the journal entries in the books of Chelsea Limited relating to this transaction Pax Limited showed the following assets and liabilities in its financial statements at 31 December 2018. DETAILS PPE Inventory Long Term Loans Account Payable CARRYING AMOUNT FAIR VALUE 10,000,000 14,000,000 4,200,000 4,400,000 (3,500,000) (3,500,000) (2,500,000) (2,500,000) 8,200,000 12,400,000 3.1. 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.arrow_forward
- Problem 2. DOLE acquires an investment for P250,000. Transaction costs amount to P15,000. Journalize the initial measurement if the investment is classified as: a. Financial asset held for trading b. Held-to-maturity investments c. Available-for-sale assetsarrow_forwardShow the solution in good accounting form Coronation company purchased an entity for 6,000,000 cash on January 31. The book value and fair value of the assets of the acquired entity as of the date of acquisition of follow: Question: What is the good arising from the acquisition? A. 4,450,000 B. 700,000 C. 2,450,000 D. 2,700,000arrow_forwardHoover Company acquired Burgess Company for $1,200,000 cash. The fair value of Burgess's assets was $1,040,000, and the company had liabilities of $60,000. Which of the following journal entries would be used to record the purchase of Burgess Company? Multiple Choice Burgess assets Burgess liabilities Goodwill Cash Burgess assets Cash 1,040,000 60,000 100,000 1,200,000 1,200,000 1,200,000arrow_forward
- Dogarrow_forwardProvide a detailed answer.arrow_forwardces The following book and fair values were available for Westmont Company as of March 1. Book Value Fair Value $ 439,750 401,250 776,250 1,019,250 2,346,750 873,750 (114,500) Inventory Land Buildings Customer relationships. Accounts payable Connon stock Additional paid-in capital Retained earnings, 1/1 Revenues Expenses View transaction list Arturo pays cash of $4,403,500 to acquire Westmont. No stock is issued and Arturo pays $50,600 for legal fees to complete the transaction. 2,025,000 Prepare Arturo's journal entries to record its acquisition of Westmont. (If no entry is required for a transaction/event, select "No Journal entry required" in the first account field.) 1 0 (114,500) (2,000,000) 2 (500,000) (445,000) (506,500) 325,000 Journal entry worksheet Note: Enter debits before credits, Transaction Record the acquisition of Westmont Company. General Journal Debit Creditarrow_forward
