ADVANCED FIN. ACCT. LL W/ACCESS>CUSTOM<
12th Edition
ISBN: 9781265074623
Author: Christensen
Publisher: MCG CUSTOM
expand_more
expand_more
format_list_bulleted
Question
Chapter 4, Problem 4.2C
To determine
Introduction: The acquisition differential is arises when the one company acquires a part of the net assets of other company.
To define: The difficulties while treating the differential when the offer is accepted.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Should Gee Co. proceed with the
acquisition of Bea Co.? yes or no? show
your solution.
The management team of Gee Co. is deciding to acquire Bea Co. an entity that sells
a product that compliments its own product. The management of Bea Co. demands
a price of P18,000,000 for it to agree with the acquisition by Gee Co. Relevant
data gathered for annual operations are as follows:
Gee Co.
Вea Co.
Combined
Average Net Income
Depreciation Expense
3,500,000
2,500,000
6,500,000
250,000
150,000
350,000
WACC
12%
15%
12.50%
Required:
Should Gwapo Co. proceed with the acquisition of Beauty Co.?
Godo
Chapter 4 Solutions
ADVANCED FIN. ACCT. LL W/ACCESS>CUSTOM<
Ch. 4 - When is the carrying value of the investment...Ch. 4 - What is a differential? How is a differential...Ch. 4 - Prob. 4.3QCh. 4 - Prob. 4.4QCh. 4 - Prob. 4.5QCh. 4 - Prob. 4.6QCh. 4 - Prob. 4.7QCh. 4 - Prob. 4.8QCh. 4 - Prob. 4.9QCh. 4 - Prob. 4.10Q
Ch. 4 - Prob. 4.11QCh. 4 - What determines whether the balance assigned to...Ch. 4 - What does the termpushdown accountingmean?Ch. 4 - Under what conditions is push-down accounting...Ch. 4 - Prob. 4.15QCh. 4 - Prob. 4.2CCh. 4 - Prob. 4.3CCh. 4 - Prob. 4.4CCh. 4 - Prob. 4.1ECh. 4 - Prob. 4.2ECh. 4 - Prob. 4.3ECh. 4 - Prob. 4.4ECh. 4 - Prob. 4.5ECh. 4 - Prob. 4.6ECh. 4 - Prob. 4.7ECh. 4 - Prob. 4.8ECh. 4 - Prob. 4.9ECh. 4 - Prob. 4.10.1ECh. 4 - Prob. 4.10.2ECh. 4 - Prob. 4.10.3ECh. 4 - Prob. 4.10.4ECh. 4 - Prob. 4.10.5ECh. 4 - Prob. 4.11.1ECh. 4 - Prob. 4.11.2ECh. 4 - Prob. 4.11.3ECh. 4 - Prob. 4.11.4ECh. 4 - Prob. 4.12ECh. 4 - Prob. 4.13ECh. 4 - Prob. 4.14ECh. 4 - Prob. 4.15ECh. 4 - Prob. 4.16ECh. 4 - Prob. 4.17ECh. 4 - Prob. 4.18.1ECh. 4 - Prob. 4.18.2ECh. 4 - Prob. 4.18.3ECh. 4 - Prob. 4.18.4ECh. 4 - Prob. 4.18.5ECh. 4 - Prob. 4.18.6ECh. 4 - Prob. 4.19ECh. 4 - Prob. 4.20ECh. 4 - Prob. 4.21ECh. 4 - Prob. 4.22ECh. 4 - Prob. 4.23ECh. 4 - Prob. 4.24AECh. 4 - Prob. 4.25PCh. 4 - Prob. 4.26PCh. 4 - Prob. 4.27PCh. 4 - Consolidated Balance Sheet Powder Company spent...Ch. 4 - Prob. 4.29PCh. 4 - Prob. 4.30PCh. 4 - Prob. 4.31PCh. 4 - Prob. 4.32PCh. 4 - Prob. 4.33PCh. 4 - Prob. 4.34PCh. 4 - Prob. 4.35PCh. 4 - Prob. 4.36PCh. 4 - Prob. 4.37AP
Knowledge Booster
Similar questions
- If the management of Beauty Co. demands a price of P28,000,000, should the management of Gwapo Co. pursue the acquisition? yes noarrow_forwardCarla Vista Company is considering the acquisition of Kingbird, Inc. To assess the amount it might be willing to pay, Carla Vista makes the following computations and assumptions. A. B. C. Kingbird, Inc. has identifiable assets with a total fair value of $6,016,000 and liabilities of $3,719,000. The assets include office equipment with a fair value approximating book value, buildings with a fair value 25% higher than book value, and land with a fair value 50% higher than book value. The remaining lives of the assets are deemed to be approximately equal to those used by Kingbird, Inc. Kingbird, Inc.'s pretax incomes for the years 2020 through 2022 were $472,100, $573,300, and $372,700, respectively. Carla Vista believes that an average of these earnings represents a fair estimate of annual earnings for the indefinite future. However, it may need to consider adjustments for the following items included in pretax earnings: Depreciation on Buildings (each year) Depreciation on Equipment…arrow_forwardPleasure refer to the picture below for the information: Instructions: Kindly show the complete solution. Thank you... Questions 1. Determine the goodwill or gain on bargain purchase from the above acquisition and Give the adjusting entries that will be made on the book of Tanangona.arrow_forward
- COMPUTE FOR THE GOODWILL.arrow_forwardBusiness Combination Versus Asset Acquisition As part of a project, Webflow Inc. acquires these assets from Digital Sea Company (in millions) Fair Value Cash Trading debt investments Equipment In-process R&D 240 60 6 The in-process R&D has no alternative future use. Webflow pays $335 million in cash for the acquired assets, and also pays $5 million in cash for legal and advisory costs. Note: Provide all answers in millions and round answers to the nearest whole number. For example, 16,355,000 would be 16. a. Prepare the journal entry to record the acquisition if it qualifies as a business combination. Debit Credit : 0 : : : : Cash To record the business combination 0 0 O 0 0 0 O O 0 0 0 0 340arrow_forwardNote:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forward
- Should Gwapo Co. proceed with the acquisition of Beauty Co.? yes or noarrow_forwardGoodwill & Impairment of GoodwillSolve the following problems. It will be helpful for the gradedcomprehensive problem found in Unit 3. Record your answers in yourlearning journal.1. On January 1, 2007 A acquired a 20% shareholding in B at acost of $40,000. On January 1, 2009, A acquired a further 40%shareholding in B at a cost of $150,000. At this time it wasdetermined that the fair value of A’s 20% shareholding in B was$50,000. Between January 1, 2007 and January 1, 2009 B madea profit of $30,000.Required:a. Calculate the cost of investment that will be used in computinggoodwillb. Calculate the goodwill arising on this transactionc. Calculate the gain arising that will be recognized in the incomestatement assuming that A’s 20% shareholding did NOT allowit to exercise significant influence over Bd. Calculate the gain arising that will be recognized in the incomestatement assuming that A’s 20% shareholding did allow it toexercise significant influence over Barrow_forwardarizona corp. acquired the business data systems for $320,000 cash and assumed all liabilites at the data of purchase. data's books showed tangible assets of $340,000, liabilities of $19,000, and stockholders' equity of $321,000. an appraiser assessed the fair market value of the tangible assets at $310,000 at the data of acquisition. a. compute the amount of goodwill acquired. b. record the acquisition in a financial statements model. Arizona corps. financial condition just prior to the aquistion is shown in the following statements model. cash paid- liabilites assumed- total- FMV of assets- goodwill-arrow_forward
- Jonas Tech Corporation recently acquired Innovation Plus Company. The combined firm consists of three related businesses that will serve as reporting units. In connection with the acquisition, Jonas requests your help with the following asset valuation and allocation issues. Support your answers with references to FASB ASC as appropriate.Jonas recognizes several identifiable intangibles from its acquisition of Innovation Plus. It expresses the desire to have these intangible assets written down to zero in the acquisition period.The price Jonas paid for Innovation Plus indicates that it paid a large amount for goodwill. However, Jonas worries that any future goodwill impairment may send the wrong signal to its investors about the wisdom of the Innovation Plus acquisition. Jonas thus wishes to allocate the combined goodwill of all of its reporting units to one account called Enterprise Goodwill. In this way, Jonas hopes to minimize the possibility of goodwill impairment because a decline…arrow_forwardBusiness Combination Versus Asset Acquisition Haley Corporation pays $3,900,000 in cash to acquire assets from Jaxon Inc., as follows: Fair Value $1,800,000 1,260,000 540,000 Machinery and equipment Developed technology (limited-life) Customer lists (limited-life) In addition, Haley pays $100,000 in cash for legal and advisory costs connected with the acquisition. Required Note: Enter all zeros with your numerical answers, do not abbreviate your answers in thousands or in millions. a. Prepare the journal entry to record the acquisition, assuming it qualifies as a business combination. Debit Credit To record the business combination + + + + + + + + + + To record the asset acquisition b. Prepare the journal entry to record the acquisition, assuming it is an asset acquisition. Credit Debit 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0arrow_forwardHoolia Corporation acquires equipment and patents from another company for $50 million and records the acquisition as an asset acquisition. The equipment has a fair value of $19.20 million and the patents have a fair value of $28.80 million. Neither asset is nonqualifying. At what value does Hoolia record the equipment? Select one: a. $25.0 million b. $20.0 million c. $21.2 million d. $19.2 millionarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning
Financial Reporting, Financial Statement Analysis...FinanceISBN:9781285190907Author:James M. Wahlen, Stephen P. Baginski, Mark BradshawPublisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning
Financial Reporting, Financial Statement Analysis...
Finance
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:Cengage Learning