Explain the valuation approaches that will be used by the Incorporation, M and Co. for the acquisition of company, OE and recognize the assets to which each will relate.

Question

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Answer 1

Question

Definition Definition Costs that a business is responsible for paying, should a particular event potentially occur in the future. Also called a potential liability, a contingent liability is generally recorded only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly. The Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Principles (IFRS) make it mandatory for the companies to record any contingent liability taking the principles of full disclosure, materiality, and prudence into consideration.

Chapter 2, Problem 44E

a.

To determine

Explain the valuation approaches that will be used by the Incorporation, M and Co. for the acquisition of company, OE and recognize the assets to which each will relate.

b.

To determine

Detail about the subjectivity which will be involved in each evaluation method used for

the acquisition of company, OE and list the kind of assumptions that will be require to

follow under each approach.

c.

To determine

Mention the total possible continent payments for achievement of clinical and regulatory

milestones regarding the acquisition of company, OE and also mention the acquisition

date fair value of the potential future payments. Explain the reason why company, OE

transaction will include the contingent payments instead of cash consideration equal to

the contingent-payment acquisition-date fair value.

d.

To determine

Prepare the journal entry related to the contingent payments that Incorporation, M and

Co. will make on July, 2017.

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Answer 2

Question

Definition Definition Costs that a business is responsible for paying, should a particular event potentially occur in the future. Also called a potential liability, a contingent liability is generally recorded only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly. The Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Principles (IFRS) make it mandatory for the companies to record any contingent liability taking the principles of full disclosure, materiality, and prudence into consideration.

Chapter 2, Problem 44E

a.

To determine

Explain the valuation approaches that will be used by the Incorporation, M and Co. for the acquisition of company, OE and recognize the assets to which each will relate.

b.

To determine

Detail about the subjectivity which will be involved in each evaluation method used for

the acquisition of company, OE and list the kind of assumptions that will be require to

follow under each approach.

c.

To determine

Mention the total possible continent payments for achievement of clinical and regulatory

milestones regarding the acquisition of company, OE and also mention the acquisition

date fair value of the potential future payments. Explain the reason why company, OE

transaction will include the contingent payments instead of cash consideration equal to

the contingent-payment acquisition-date fair value.

d.

To determine

Prepare the journal entry related to the contingent payments that Incorporation, M and

Co. will make on July, 2017.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 3

Question

Definition Definition Costs that a business is responsible for paying, should a particular event potentially occur in the future. Also called a potential liability, a contingent liability is generally recorded only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly. The Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Principles (IFRS) make it mandatory for the companies to record any contingent liability taking the principles of full disclosure, materiality, and prudence into consideration.

Chapter 2, Problem 44E

a.

To determine

Explain the valuation approaches that will be used by the Incorporation, M and Co. for the acquisition of company, OE and recognize the assets to which each will relate.

b.

To determine

Detail about the subjectivity which will be involved in each evaluation method used for

the acquisition of company, OE and list the kind of assumptions that will be require to

follow under each approach.

c.

To determine

Mention the total possible continent payments for achievement of clinical and regulatory

milestones regarding the acquisition of company, OE and also mention the acquisition

date fair value of the potential future payments. Explain the reason why company, OE

transaction will include the contingent payments instead of cash consideration equal to

the contingent-payment acquisition-date fair value.

d.

To determine

Prepare the journal entry related to the contingent payments that Incorporation, M and

Co. will make on July, 2017.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Definition Definition Costs that a business is responsible for paying, should a particular event potentially occur in the future. Also called a potential liability, a contingent liability is generally recorded only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly. The Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Principles (IFRS) make it mandatory for the companies to record any contingent liability taking the principles of full disclosure, materiality, and prudence into consideration.

Chapter 2, Problem 44E

a.

To determine

Explain the valuation approaches that will be used by the Incorporation, M and Co. for the acquisition of company, OE and recognize the assets to which each will relate.

b.

To determine

Detail about the subjectivity which will be involved in each evaluation method used for

the acquisition of company, OE and list the kind of assumptions that will be require to

follow under each approach.

c.

To determine

Mention the total possible continent payments for achievement of clinical and regulatory

milestones regarding the acquisition of company, OE and also mention the acquisition

date fair value of the potential future payments. Explain the reason why company, OE

transaction will include the contingent payments instead of cash consideration equal to

the contingent-payment acquisition-date fair value.

d.

To determine

Prepare the journal entry related to the contingent payments that Incorporation, M and

Co. will make on July, 2017.

Expert Solution & Answer

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Answer 5

Chapter 2, Problem 44E

a.

To determine

Explain the valuation approaches that will be used by the Incorporation, M and Co. for the acquisition of company, OE and recognize the assets to which each will relate.

b.

To determine

Detail about the subjectivity which will be involved in each evaluation method used for

the acquisition of company, OE and list the kind of assumptions that will be require to

follow under each approach.

c.

To determine

Mention the total possible continent payments for achievement of clinical and regulatory

milestones regarding the acquisition of company, OE and also mention the acquisition

date fair value of the potential future payments. Explain the reason why company, OE

transaction will include the contingent payments instead of cash consideration equal to

the contingent-payment acquisition-date fair value.

d.

To determine

Prepare the journal entry related to the contingent payments that Incorporation, M and

Co. will make on July, 2017.

Answer 6

Chapter 2, Problem 44E

a.

To determine

Explain the valuation approaches that will be used by the Incorporation, M and Co. for the acquisition of company, OE and recognize the assets to which each will relate.

Answer 7

Chapter 2, Problem 44E

a.

To determine

Explain the valuation approaches that will be used by the Incorporation, M and Co. for the acquisition of company, OE and recognize the assets to which each will relate.

Answer 8

b.

To determine

Detail about the subjectivity which will be involved in each evaluation method used for

the acquisition of company, OE and list the kind of assumptions that will be require to

follow under each approach.

Answer 9

b.

To determine

Detail about the subjectivity which will be involved in each evaluation method used for

the acquisition of company, OE and list the kind of assumptions that will be require to

follow under each approach.

Answer 10

c.

To determine

Mention the total possible continent payments for achievement of clinical and regulatory

milestones regarding the acquisition of company, OE and also mention the acquisition

date fair value of the potential future payments. Explain the reason why company, OE

transaction will include the contingent payments instead of cash consideration equal to

the contingent-payment acquisition-date fair value.

Answer 11

c.

To determine

Mention the total possible continent payments for achievement of clinical and regulatory

milestones regarding the acquisition of company, OE and also mention the acquisition

date fair value of the potential future payments. Explain the reason why company, OE

transaction will include the contingent payments instead of cash consideration equal to

the contingent-payment acquisition-date fair value.

Answer 12

d.

To determine

Prepare the journal entry related to the contingent payments that Incorporation, M and

Co. will make on July, 2017.

Answer 13

d.

To determine

Prepare the journal entry related to the contingent payments that Incorporation, M and

Co. will make on July, 2017.

Answer 14

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Answer 15

Expert Solution & Answer

Answer 16

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Answer 17

Ch. 2 - Prob. 1Q Ch. 2 - Prob. 2Q Ch. 2 - Prob. 3Q Ch. 2 - Prob. 4Q Ch. 2 - Prob. 5Q Ch. 2 - Prob. 6Q Ch. 2 - Prob. 7Q Ch. 2 - Prob. 8Q Ch. 2 - Prob. 9Q Ch. 2 - Prob. 10Q

Explain the valuation approaches that will be used by the Incorporation, M and Co. for the acquisition of company, OE and recognize the assets to which each will relate.

Explain the valuation approaches that will be used by the Incorporation, M and Co. for the acquisition of company, OE and recognize the assets to which each will relate.

Detail about the subjectivity which will be involved in each evaluation method used for the acquisition of company, OE and list the kind of assumptions that will be require to follow under each approach.

Prepare the journal entry related to the contingent payments that Incorporation, M and Co. will make on July, 2017.

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Chapter 2 Solutions

Detail about the subjectivity which will be involved in each evaluation method used for

the acquisition of company, OE and list the kind of assumptions that will be require to

follow under each approach.

Prepare the journal entry related to the contingent payments that Incorporation, M and

Co. will make on July, 2017.