Concept explainers
(a)
Introduction:
When a company holds 50% or more of the common stock of another company then both the companies are treated as a single entity. In such a case, consolidated statements are prepared.
To prepare:
(b)
Introduction:
When a company holds 50% or more of the common stock of another company then both the companies are treated as a single entity. In such a case, consolidated statements are prepared.
To prepare:
(c)
Introduction:
When a company holds 50% or more of the common stock of another company then both the companies are treated as a single entity. In such a case, consolidated statements are prepared.
To prepare:
Balance Sheet of D Corporation. (post acquisition).
(d)
Introduction:
When a company holds 50% or more of the common stock of another company then both the companies are treated as a single entity. In such a case, consolidated statements are prepared.
To calculate:
The
(e)
Introduction:
When a company holds 50% or more of the common stock of another company then both the companies are treated as a single entity. In such a case, consolidated statements are prepared.
To prepare:
Consolidated Balance Sheet.
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Cornerstones of Financial Accounting
- Determine the following balances that would appear in the consolidated financial statements of P COMPANY and S COMPANY:1. Total Assets2. Total Liabilities3. Equityarrow_forwardBox Company (the transferor company) and Cox Company (the transferee company) amalgamate in an exchange of stock to form Cox & Box Company. The pre-amalgamation balance sheets of Cox Company and Box Company are as follows: 1. Вох Сompany Сох Соmpany * in million) (® in million) Fixed assets 25 10.0 Current assets 20 7.5 Total assets Share capital (? 10 face value) Reserves and surplus Debt 45 17.5 20 5 10 10 15 2.5 45 17.5 For each share held in Box Company, two shares of Cox Company were given in exchange (face value: 710, share premium: 720) as the market price of Cox's equity shares is 730. The fair market value of the fixed assets and current assets of Box Company was assessed at ?20 million and 710 million, respectively. Prepare the post-amalgamation balance sheet of Cox & Box Company under the 'pooling' and 'purchase' methods. 000arrow_forwardManna Ltd. enters into a business combination with Noah Inc. in which Manna purchases all of the identifiable assets and liabilities of Noah Inc. To effect the business combination, Manna issued 50,000 of its common shares currently trading at $8.00 per share for all of Noah's net identifiable assets. Manna is considered to be the clear acquirer. Costs associated with the business combination are: Legal, appraisal, and finders' fees $5,000 Costs of issuing shares 7,000 $12,000 Balance sheet data for the two companies immediately before the business combination are below: Manna Ltd. Book Value Noah Inc. Book Value Fair Value Cash $ 140,000 $ 52,500 $ 52,500 Accounts Receivable 167,200 61,450 56,200 Inventory 374,120 110,110 134,220 Land 425,000 75,000 210,000 Buildings (at net) 250,505 21,020 24,020 Equipment (at net) 78,945 17,705 15,945 Total Assets $1,435,770 $337,785 Current Liabilities $ 133,335 $ 41,115 $ 41,115 Non-current Liabilities ------------ 150,000 155,000 Common Shares…arrow_forward
- Colour Ltd. enters into a business combination with Pink Inc. on January 1, Year 1. To complete the business combination, Colour Ltd. issued 65,000 of its common shares which is currently trading at $9.00 per share. Colour is considered to be the clear acquirer. Costs associated with the business combination are: Acquisition cost of $6,500; and Costs of issuing shares of $8,000 Statement of financial position for the two companies immediately before the business combination are below: Colour Ltd. Pink Inc. Book Value Fair Value Book Value Fair Value Cash 165,500 165,500 63,050 63,050 Accounts Receivable 156,800 155,000 98,550 80,500 Inventory 388,770 402,500 123,450 134,000 Equipment (net) 458,550 408,900 60,800 65,500 Buildings (net) 335,000 446,500 249,580 309,450 Land 412,500 585,000 - Total 1,917,120 595,430 Current liabilities 185,560 185,560 41,160 41,160 Long-term debt 580,660 590,000 150,000 155,000 Common shares…arrow_forwardodwill to be amortized periodically for 20 years. G. Goodwill to be amortized for 40 years D. Expenses immediately. B. Goodwill not subject to amortization but subject to impairment. 3. Two methods of arranging business combinations: C. Acquisition and uniting of interest D. Merger and acquisition of stocks A/ Merger and consolidation B. Consolidation and Acquisition of stocks . The cost of registering equity securities in a business combination should be recorded as: A. An income of the period B. An expense of the period C. Deduction from additional paid-in capital D. Part of the cost of the stock acquired 5. In acquisition-type combination, the appropriate accounting for the excess of fair values of net assets acquired er the price paid is to: A. Recognize as income in the books of the acquirer B. Recognize as additional paid-in capital in the books of the acquirer blbe C. Reduce proportionately current fair values assigned to the acquiree's non-current assets any remaining excess as…arrow_forwardNikularrow_forward
- Bhupatbhaiarrow_forwardCase 2: before the transaction, Richard, Inc. have 20,000 outstanding shares. Richard issued 12,000 shares as consideration for a 60% interest in Frank. Richard’s shares currently sell P55 per share in the market, while Frank’s shares are quoted at P225 per share. Richard, Inc. elected to measure NCI at “proportionate share”. 1.How much is the goodwill (gain on bargain purchase) on the business combination?a. P (50,000.00)b. P 50,000.00c. P 55,000.00d. P 60,000.002.How much is the total Goodwill in the books of Richard, Inc. after the business combination?a. P 140,000.00b. P 190,000.00c. P 300,000.00d. P (300,000.00)3.How much is the total Share Capital in the books of Richard, Inc. after the business combination?a. P 600,000.00b. P 660,000.00c. P 620,000.00d. P 640,000.00arrow_forwardHow much is the consolidated total assets on January 1, 20x1? How much is the consolidated total equity on January 1, 20x1?arrow_forward
- Harvey Company increased its ownership in Washington Company from 70% to 90% by the purchase of additional shares of the Washington’s outstanding stock from noncontrolling shareholders for a purchase price of $300,000. Immediately prior to the transaction, Harvey’s consolidated balance sheet included a noncontrolling interest balance of $1,000,000.The journal entry by Harvey to record the purchase includes: Select one: A. Cash credit, $333,333 B. APIC credit, $300,000 C. APIC credit, $333,333 D. APIC credit, $33,333arrow_forwardMan merged with San Corporation in a business combination in which San issued 30,000 shares of its $5 par (current fair value $20 a share) common stock to stockholders of Man in exchange for all their outstanding common stock. The journal entry for the merger includes: a. Debit to investment in common stock of Man company $ 600,000. b. Debit to investment in common stock of Man company $ 450,000. c. Debit to investment in common stock of Man company $ 150,000. d. Debit to investment in common stock of Man company $ 300,000.arrow_forwardBusiness Combination - Accounting for an acquirer) On 1 July 2020, B Ltd acquired all the assets and liabilities of P Ltd. In exchange for these assets and liabilities, Brad Ltd issued 100,000 shares that at date of issue had a fair value of $4.50 per share. Costs of issuing these shares amounted to $2,000. Legal costs associated with the acquisition of Pitt Ltd amounted to $3,200. The asset and liabilities of P Ltd at 1 July 2020 were as follows (Extract): Assets Carrying Amount Fair Value Cash $ 3 000 - Account Receivable 12 000 $ 12 000 Inventories 63 000 69 000 Plant and equipment 330 000 225 000 Accumulated Depreciation – plant and Equipment (100 000) - Land 200 000 280 000 Liabilities Accounts payable 22 000 22 000 Debentures 68 000 68 000 Required: prepare the journal entries in the records of B Ltd at 1 July 2020.arrow_forward
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage LearningFinancial Reporting, Financial Statement Analysis...FinanceISBN:9781285190907Author:James M. Wahlen, Stephen P. Baginski, Mark BradshawPublisher:Cengage Learning