Accounting: What the Numbers Mean
12th Edition
ISBN: 9781308841380
Author: David H. Marshall, Wayne W. McManus, Daniel F. Viele
Publisher: McGraw Hill
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Textbook Question
Chapter 2, Problem 2.9E
Exercise 2.9
LQ 2 , 3
Understanding financial statement relationships The information presented here represents selected data from the December 31, 2016,
| Firm A | Firm B | Firm C | |
| Total assets, 12/31/16 | $210,000 | $270,000 | $162,000 |
| Total liabilities, 12/31/16 | 108,000 | 72,000 | ? |
| Paid-in capital, 12/31/16 | 37,000 | ? | 20,000 |
| ? | 155,000 | ? | |
| Net income for 2016 | ? | 41,000 | 56,000 |
| Dividends declared and paid during 2016 | 25,000 | 9,000 | 32,000 |
| Retained earnings, 1/1/16 | 39,000 | ? | 21,000 |
Required:
Calculate the missing amounts for each firm.
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On May 31, 2026, Oriole Company paid $3,290,000 to acquire all of the common stock of Pharoah Corporation, which became a
division of Oriole. Pharoah reported the following balance sheet at the time of the acquisition:
Current assets
$846,000
Current liabilities
$564,000
Noncurrent assets
2,538,000
Long-term liabilities
470,000
Stockholder's equity
2,350,000
Total assets
$3,384,000
Total liabilities and stockholder's equity
$3,384,000
It was determined at the date of the purchase that the fair value of the identifiable net assets of Pharoah was $2,914,000. At
December 31, 2026, Pharoah reports the following balance sheet information:
Current assets
$752,000
Noncurrent assets (including goodwill recognized in purchase)
2,256,000
Current liabilities
(658,000)
Long-term liabilities
(470,000)
Net assets
$1,880,000
It is determined that the fair value of the Pharoah division is $2,068,000.
On May 31, 2026, Oriole Company paid $3,290,000 to acquire all of the common stock of Pharoah Corporation, which became a
division of Oriole. Pharoah reported the following balance sheet at the time of the acquisition:
Current assets
$846,000
Current liabilities
$564,000
Noncurrent assets
2,538,000
Long-term liabilities
470,000
Stockholder's equity
2,350,000
Total assets
$3,384,000
Total liabilities and stockholder's equity
$3,384,000
It was determined at the date of the purchase that the fair value of the identifiable net assets of Pharoah was $2,914,000. At
December 31, 2026, Pharoah reports the following balance sheet information:
Current assets
$752,000
Noncurrent assets (including goodwill recognized in purchase)
2,256,000
Current liabilities
(658,000)
Long-term liabilities
(470,000)
Net assets
$1,880,000
It is determined that the fair value of the Pharoah division is $2,068,000.
The following transactions involving intangible assets of Oriole Corporation occurred on or near December 31, 2025.
1.) Oriole paid Grand Company $520,000 for the exclusive right to market a particular product, using the Grand name and logo in promotional material. The franchise runs for as long as Oriole is in business.
2.) Oriole spent $654,000 developing a new manufacturing process. It has applied for a patent, and it believes that its application will be successful.
3.) In January 2026, Oriole's application for a patent (#2 above) was granted. Legal and registration costs incurred were $247,800. The patent runs for 20 years. The manufacturing process will be useful to Oriole for 10 years.
4.) Oriole incurred $168,000 in successfully defending one of its patents in an infringement suit. The patent expires during December 2029.
5.) Oriole incurred $446,400 in an unsuccessful patent defense. As a result of the adverse verdict, the patent, with a remaining unamortized cost of…
Chapter 2 Solutions
Accounting: What the Numbers Mean
Ch. 2 - Prob. 2.1MECh. 2 - Prob. 2.2MECh. 2 - Prob. 2.3MECh. 2 - Prob. 2.4MECh. 2 - Mini-Exercise 2.5 LO 2. 4 Identify accounts by...Ch. 2 - Mini-Exercise 2.6 LO 2. 4 Identify accounts by...Ch. 2 - Prob. 2.7ECh. 2 - Exercise 2.8 LO 2. 4 Identify accounts by category...Ch. 2 - Exercise 2.9 LQ 2 , 3 Understanding financial...Ch. 2 - Exercise 2.10 LO 2 , 3 Understanding financial...
Ch. 2 - Prob. 2.11ECh. 2 - Exercise 2.12 LQ 2. 3 Calculate retained earnings...Ch. 2 - Prob. 2.13ECh. 2 - Prob. 2.14ECh. 2 - Prob. 2.15PCh. 2 - Prob. 2.16PCh. 2 - Problem 2.17 LO 2, 3, 4 Understanding and...Ch. 2 - Problem 2.18 LO 2. 3, 4 Understanding and...Ch. 2 - Problem 2.19 LO 2, 3, 4 Prepare an income...Ch. 2 - Prob. 2.20PCh. 2 - Problem 2.21
LO 2, 3
Transaction...Ch. 2 - Prob. 2.22PCh. 2 - Problem 2.23 LO 2, 3, 5 Complete the balance sheet...Ch. 2 - Prob. 2.24PCh. 2 - Prob. 2.25PCh. 2 - Prob. 2.26PCh. 2 - Case 2.27 LO 2, 4, 6, 7 Prepare a personal balance...
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