ADV. ACCT LOOSELEAF W/ CONNECT ACCESS
13th Edition
ISBN: 9781266324857
Author: Hoyle
Publisher: MCG
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Chapter 2, Problem 27P
To determine
Prepare an acquisition-date consolidated
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On January 1, 2021, Casey Corporation exchanged $3,300,000 cash for 100 percent of the outstanding voting stock of Kennedy Corporation. Casey plans to maintain Kennedy as a wholly owned subsidiary with separate legal status and accounting information systems.
At the acquisition date, Casey prepared the following fair-value allocation schedule:
Fair value of Kennedy (consideration transferred)
$
3,300,000
Carrying amount acquired
2,600,000
Excess fair value
$
700,000
to buildings (undervalued)
$
382,000
to licensing agreements (overvalued)
(108,000
)
274,000
to goodwill (indefinite life)
$
426,000
Immediately after closing the transaction, Casey and Kennedy prepared the following postacquisition balance sheets from their separate financial records (credit balances in parentheses).
Accounts
Casey
Kennedy
Cash
$
457,000
$
172,500
Accounts receivable
1,655,000…
On January 1, 2021, Casey Corporation exchanged $3,210,000 cash for 100 percent of the outstanding voting stock of Kennedy Corporation. Casey plans to maintain Kennedy as a wholly owned subsidiary with separate legal status and accounting information systems.
At the acquisition date, Casey prepared the following fair-value allocation schedule:
Fair value of Kennedy (consideration transferred)
$
3,210,000
Carrying amount acquired
2,600,000
Excess fair value
$
610,000
to buildings (undervalued)
$
393,000
to licensing agreements (overvalued)
(193,000
)
200,000
to goodwill (indefinite life)
$
410,000
Immediately after closing the transaction, Casey and Kennedy prepared the following postacquisition balance sheets from their separate financial records (credit balances in parentheses).
Accounts
Casey
Kennedy
Cash
$
480,000
$
166,500
Accounts receivable
1,420,000
295,000
Inventory…
On January 1, 2021, Casey Corporation exchanged $3,218,000 cash for 100 percent of the outstanding voting stock of Kennedy Corporation. Casey plans to maintain Kennedy as a wholly owned subsidiary with separate legal status and accounting information systems.
At the acquisition date, Casey prepared the following fair-value allocation schedule:
Fair value of Kennedy (consideration transferred)
$
3,218,000
Carrying amount acquired
2,600,000
Excess fair value
$
618,000
to buildings (undervalued)
$
391,000
to licensing agreements (overvalued)
(190,000
)
201,000
to goodwill (indefinite life)
$
417,000
Immediately after closing the transaction, Casey and Kennedy prepared the following postacquisition balance sheets from their separate financial records (credit balances in parentheses).
Accounts
Casey
Kennedy
Cash
$
470,000
$
178,500
Accounts receivable
1,470,000
286,000
Inventory…
Chapter 2 Solutions
ADV. ACCT LOOSELEAF W/ CONNECT ACCESS
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
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- Allerton Company acquires all of Deluxe Company's assets and liabilities for cash on January 1, 2024, and subsequently formally dissolves Deluxe. At the acquisition date, the following book and fair values were available for the Deluxe Company accounts: Items Current assets Building Land Book Values Fair Values $ 53,500 93,750 $ 53,500 47,750 24,250 41,250 Trademark 0 39,300 Goodwill 20,000 ? Liabilities (56,500) (56,500) Common stock (100,000) Retained earnings (35,000) 0 0 Required: a. and b. Prepare Allerton's journal entry to record its acquisition of Deluxe in its accounting records assuming the following cash exchange amounts: $167,000 and $104,500. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.arrow_forwardOn January 1, 2025, Henderson Company purchased 100% of the common stock of Caramel Company for $590,000 cash. Fair values differed from book values as follows: Fair value Land 100,000 Patent 250,000 Bonds Payable 105,000 The trial balances of the companies at the acquisition date are as follows: Trial Balance Account Titles Henderson Caramel Cash 650,000 65,000 Land 120,000 30,000 Buildings, net 250,000 180,000 Goodwill 400,000 200,000 Current Liabilities 170,000 75,000 Bonds Payable 500,000 100,000 Common Stock 70,000 30,000 APIC 350,000 70,000 Retained Earnings 330,000 200,000 Which of the following is not one of the eliminations and adjustments included on the consolidation worksheet at the acquisition date? Question 9Answer a. Debit to Common Stock for $30,000 b. Credit to Goodwill for $200,000 c. Credit to Investment in Sub for $590,000 d. Debit to Land for…arrow_forwardOn January 1, 2025, Henderson Company purchased 100% of the common stock of Caramel Company for $590,000 cash. Fair values differed from book values as follows: Fair value Land 100,000 Patent 250,000 Bonds Payable 105,000 The trial balances of the companies at the acquisition date are as follows: Trial Balance Account Titles Henderson Caramel Cash 650,000 65,000 Land 120,000 30,000 Buildings, net 250,000 180,000 Goodwill 400,000 200,000 Current Liabilities 170,000 75,000 Bonds Payable 500,000 100,000 Common Stock 70,000 30,000 APIC 350,000 70,000 Retained Earnings 330,000 200,000 The amount reported for Cash on the consolidated balance sheet at the acquisition date is Question Answer a. $125,000 b. $650,000 c. $65,000 d. $715,000arrow_forward
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