Advanced Accounting
14th Edition
ISBN: 9781260247824
Author: Joe Ben Hoyle, Thomas F. Schaefer, Timothy S. Doupnik
Publisher: RENT MCG
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On January 1, 2021, Squirtle Company sold a piece of equipment to Charmander Company with a cost of
P3,500,000 and accumulated depreciation of P500,000 in exchange for an annual 6% interest-bearing note,
P3,600,000. Charmander company is required to make ten equal semi-annual payments of principal plus
interest.
Questions:
1. How much is the total amount that will reflect in the statement of comprehensive income for the year
2021 that is related to the above transaction?
2. What is the interest income for the year 2023?
3. How much is the total proceeds of Squirtle for the year 2024?
On January 1, 2020, AMI Corporation purchased the non-cash net assets of Sheffield Ltd. for $8,087,900. Following is the statement of financial position of Sheffield Ltd. from the company's year-end the previous day:
Sheffield Ltd.Statement of Financial PositionAs at December 31, 2019
Cash
$630,000
Accounts receivable
554,000
Inventory
2,510,000
Property, plant, and equipment (net)
2,070,000
Land
2,570,000
$8,334,000
Accounts payable
$324,000
Common shares
2,520,000
Retained earnings
5,490,000
$8,334,000
As part of the negotiations, AMI and Sheffield agreed on the following fair values for the items on Sheffield's statement of financial position:
Accounts receivable
$552,400
Inventory
2,265,000
Property, plant, and equipment
1,870,000
Land
3,620,000
Accounts payable
313,500
Prepare the journal entry on the books of AMI Corporation to record the purchase, assuming that instead of buying the net assets of…
On June 1, 2021, Cline Company paid P800,000 cash for the assets and liabilities of Renn Corp. The carrying values for Renn's assets and liabilities on June 1, 2021 follow: Cash - P150,000; Accounts receivable - P180,000; Capitalized software costs - P320,000; Goodwill - P100,000; and Liabilities - P130,000. On June 1, 2021, Renn's accounts receivable had a fair value of P140,000. Additionally, Renn's in-process and development costs was estimated to have a fair value of P200,000. Renn Corp. had a contingent liability of P20,000, the fair value of which was P15,000. Renn agreed to indemnify Cline for P10,000 for the contingent liability. All other items were stated at their fair values. On Cline's June 1 balance sheet. How much is reported for goodwill?
A. P90,000
B. P85,000
C. P130,000
D. P125,000
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