EBK STRATEGIC MANAGEMENT: CONCEPTS
EBK STRATEGIC MANAGEMENT: CONCEPTS
4th Edition
ISBN: 8220106797259
Author: Rothaermel
Publisher: YUZU
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Chapter MC, Problem 9.6DQ
Summary Introduction

Case summary:

The new generation of people is attracted towards fancy gadgets and vehicles. Company GT invented a safety razor model. It is low tech innovation which began to grab the market share rapidly.

The razor blade business is widely adopted now. The pricing policy exposed the low-cost disruption of the company. Company DS is an e-commerce company that followed a subscription-based model. The market share of Company GT began to decline after many innovations in the razor blade product category.

To explain: If online startups like Company DS continue to steal the market share from Company GT.

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EXERCISE 3-5     Treasury Stock Held by Subsidiary LO 8Pool Company purchased 90% of the outstanding common stock of Spruce Company on December31, 2019, for cash. At that time the balance sheet of Spruce Company was as follows:Current assets $1,050,000Plant and equipment 990,000Land 170,000Total assets $2,210,000Liabilities $ 820,000Common stock, $20 par value 900,000Other contributed capital 440,000Retained earnings 150,000Total 2,310,000Less treasury stock at cost, 5,000 shares 100,000Total equities $2,210,000Required:Prepare the elimination entry required for the preparation of a consolidated balance sheet workpaper on December 31, 2019, assuming:(1) The purchase price of the stock was $1,400,000. Assume that any difference between thebook value of net assets and the value implied by the purchase price relates to subsidiary land.(2) The purchase price of the stock was $1,160,000. Assume that the subsidiary land has a fairvalue of $180,000, and the other assets and liabilities are…
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Chapter MC Solutions

EBK STRATEGIC MANAGEMENT: CONCEPTS

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