Advanced Financial Accounting
12th Edition
ISBN: 9781259916977
Author: Christensen, Theodore E., COTTRELL, David M., Budd, Cassy
Publisher: Mcgraw-hill Education,
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Question
Chapter 1, Problem 1.30P
a.
To determine
Concept Introduction:
Consolidation: Consolidation is the process of accounting where books of the parent company are reported along with the books of the subsidiary company in consolidated/combined form after making necessary
To Explain:
a.
Expert Solution
Explanation of Solution
Following journal entry would be recorded:
| In the books of P Corporation | ||||
| Journal Entry Register | ||||
| Particulars | Debit | Credit | ||
| (1) | Merger Expense | 178000 | ||
| To cash | 178000 | |||
| Being legal fees paid recorded | ||||
| (2) | Cash | 20000 | ||
| | ||||
| Inventory | | |||
| Patents | | |||
| Building & Equipment | | |||
| | ||||
| To Accounts Payable | | |||
| To Notes Payable | | |||
| Being purchase of S corporation recoded | ||||
b.
To determine
Concept Introduction:
Consolidation: Consolidation is the process of accounting where books of the parent company are reported along with the books of the subsidiary company in consolidated/combined form after making necessary adjustment entries as required in the process of consolidation.
To Prepare: a balance sheet for P immediately after acquisition.
b.
Expert Solution
Explanation of Solution
| Combined Balance Sheet | ||||
| February 1, 20X3 | ||||
| Liabilities | Amount | Assets | Amount | |
| Accounts Payable | | Cash | | |
| Notes Payable | | Accounts Receivable | | |
| Common Stock | | Inventory | | |
| Additional Paid in Capital | | Patents | | |
| Retained Earnings | | Buildings and Equipment | | |
| Less: Accumulated Dep. | | |||
| Goodwill | | |||
| Total | | Total | | |
c.
To determine
Concept Introduction:
Consolidation: Consolidation is the process of accounting where books of the parent company are reported along with the books of the subsidiary company in consolidated/combined form after making necessary adjustment entries as required in the process of consolidation.
To Explain: journal entry to be recorded by P if it acquired all of S’s common Stock (instead of S’s net assets) for
c.
Expert Solution
Explanation of Solution
Journal entry to be recorded:
| In the books of P Corporation | ||||
| Journal Entry Register | ||||
| Particulars | Debit | Credit | ||
| Investment in Zink Co. | | |||
| To Cash | | |||
| Being legal fees paid recorded | ||||
Note 1: Computation of Goodwill
Fair Value of consideration given:
Fair Value of net assets acquired:
Therefore, value of goodwill is
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Students have asked these similar questions
The partners of the Liwa Engineering Company have decided to terminate the business. The balances of the
company's accounts prior to the liquidation are given in the Table 1.
Table 1
Book value in OMR
Cash
28,500
Plant assets (net)
75,000
Machinery and equipment (net)
2,500
Inventories
1,300
Liabilities
47,300
Capital, Partner 1
36,000
Capital, Partner 2
24,000
Additional information:
The partner 1 and the partner 2 share profits and losses in the ratio 7:3.
In the process of liquidation, the non-cash assets are sold for OMR 125,000.
Required:
A. You are asked to prepare a schedule of cash payments (Table 2), showing how cash will be distributed
between the partners as it becomes available.
B. Based on the information above (Table 2 – Schedule of Cash Payments), journalize the transactions.
Accounting
On January 1, 20X1, Porta Corporation purchased Swick Company's net assets
and assigned goodwill of $81,500 to Reporting Division K. The following assets
and liabilities are assigned to Reporting Division K on the acquisition date:
Carrying Fair
Amount
Value
Cash
15,500
$ 15,500
Inventory
57,500
72,500
Equipment
185,000
205,000
Goodwill
81,500
Accounts
31,500
31,500
Payable
Required:
On December 31, 20X3, Porta must test goodwill for impairment. Determine the
amount of goodwill to be reported for Division K and the amount of goodwill
impairment to be recognized, if any, if Division K's fair value is determined to be
$355,000.
$295,000.
$275,000.
1. Record the acquisition of Soriano Co. Assume its initial cash payment to the former owners was $741,400.
2. Record the expenses related to the combination. Assume its initial cash payment to the former owners was $741,400.
3. Record the acquisition of Soriano Co. Assume its initial cash payment to the former owners was $861,500.
4. Record the expenses related to the combination. Assume its initial cash payment to the former owners was $861,500.
Chapter 1 Solutions
Advanced Financial Accounting
Ch. 1 - What types of circumstances would encourage...Ch. 1 - How would the decision to dispose of a segment of...Ch. 1 - Prob. 1.3QCh. 1 - Prob. 1.4QCh. 1 - Prob. 1.5QCh. 1 - Prob. 1.6QCh. 1 - Prob. 1.7QCh. 1 - Prob. 1.8QCh. 1 - Prob. 1.9QCh. 1 - Prob. 1.10Q
Ch. 1 - Prob. 1.11QCh. 1 - Prob. 1.12QCh. 1 - Prob. 1.13QCh. 1 - Prob. 1.14QCh. 1 - Within the measurement period following a business...Ch. 1 - Prob. 1.16QCh. 1 - Prob. 1.1CCh. 1 - Prob. 1.2CCh. 1 - Prob. 1.3CCh. 1 - Prob. 1.4CCh. 1 - Risks Associated with Acquisitions Not all...Ch. 1 - Prob. 1.6CCh. 1 - Prob. 1.1.1ECh. 1 - Prob. 1.1.2ECh. 1 - Prob. 1.1.3ECh. 1 - Multiple-Choice Questions on Complex Organizations...Ch. 1 - Prob. 1.1.5ECh. 1 - Prob. 1.2.1ECh. 1 - Prob. 1.2.2ECh. 1 - Multiple-Choice Questions on Recording Business...Ch. 1 - Prob. 1.2.4ECh. 1 - Multiple-Choice Questions on Recording Business...Ch. 1 - Multiple-Choice Questions on Reported Balances...Ch. 1 - Multiple-Choice Questions on Reported Balances...Ch. 1 - Prob. 1.3.3ECh. 1 - Prob. 1.3.4ECh. 1 - Prob. 1.4.1ECh. 1 - Prob. 1.4.2ECh. 1 - Prob. 1.4.3ECh. 1 - Multiple-Choice Questions Involving Account...Ch. 1 - Prob. 1.4.5ECh. 1 - Prob. 1.5ECh. 1 - Prob. 1.6ECh. 1 - Prob. 1.7ECh. 1 - Prob. 1.8ECh. 1 - Prob. 1.9ECh. 1 - Prob. 1.10ECh. 1 - Balances Reported Following Combination Palm...Ch. 1 - Goodwill Recognition Spur Corporation reported the...Ch. 1 - Acquisition Using Debentures Planter Corporation...Ch. 1 - Bargain Purchase Using the data resented in E1-13,...Ch. 1 - Prob. 1.15ECh. 1 - Prob. 1.16ECh. 1 - Prob. 1.17ECh. 1 - Prob. 1.18ECh. 1 - Prob. 1.19ECh. 1 - Prob. 1.20ECh. 1 - Prob. 1.21ECh. 1 - Prob. 1.22ECh. 1 - Prob. 1.23ECh. 1 - Prob. 1.24PCh. 1 - Prob. 1.25PCh. 1 - Prob. 1.26PCh. 1 - Acquisition in Multiple Steps Peal Corporation...Ch. 1 - Prob. 1.28PCh. 1 - Prob. 1.29PCh. 1 - Prob. 1.30PCh. 1 - Prob. 1.31PCh. 1 - Computation of Account Balances Saspro Division is...Ch. 1 - Prob. 1.33PCh. 1 - Prob. 1.34PCh. 1 - Prob. 1.35PCh. 1 - Business Combination Following are the balance...Ch. 1 - Prob. 1.37PCh. 1 - Prob. 1.38PCh. 1 - Prob. 1.39PCh. 1 - Prob. 1.40P
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