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 1.37P
a.
To determine
Concept Introduction:
Consolidation: Merger is a combination where two entities merge to take the benefit of synergies where assets and liabilities of the two entities combine to form a new entity.
To Prepare: a
a.
Expert Solution
Explanation of Solution
| P Inc. and S Company | |||
| Combined Balance Sheet | |||
| January 1, 20X3 | |||
| Cash and Receivable | Current Liabilities | ||
| Inventory | Capital Stock | ||
| Land | Capital in excess of par value | ||
| Plant and Equipment | Retained Earnings | ||
| Less: Accumulated Depreciation | |||
| Goodwill | |||
| Total | Total | ||
Computation of Goodwill:
Fair value of the consideration given
Fair value of net assets acquired
Goodwill
Fair value of consideration given lessfair value of net assets acquired
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
To Prepare:
b.
Expert Solution
Explanation of Solution
| (1) | Stockholder’s equity with shares issued: | |
| Capital Stock | ||
| Capital in Excess of Par Value | ||
| Total | ||
| (2) | Stockholder’s equity with shares issued: | |
| Capital Stock | ||
| Capital in Excess of Par Value | ||
| Retained Earnings | ||
| Total | ||
| (3) | Stockholder’s equity with shares issued: | |
| Capital Stock | ||
| Capital in Excess of Par Value | ||
| Retained Earnings | ||
| Total |
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Students have asked these similar questions
Pamrod Manufacturing acquired all the assets and liabilities of Stafford Industries on January 1, 20X2, in exchange for 4,100 shares of Pamrod’s $20 par value common stock. Balance sheet data for both companies just before the merger are given as follows:
Pamrod Manufacturing
Stafford Industries
Balance Sheet Items
Book Value
Fair Value
Book Value
Fair Value
Assets
Cash
$
84,000
$
84,000
$
30,000
$
30,000
Accounts Receivable
103,000
103,000
56,000
56,000
Inventory
215,000
376,000
112,000
153,000
Land
59,000
89,000
49,000
26,000
Buildings and Equipment
608,000
542,000
402,000
344,000
Less: Accumulated Depreciation
(236,000
)
(141,000
)
Total Assets
$
833,000
$
1,194,000
$
508,000
$
609,000
Liabilities and Equities
Accounts Payable
$
66,000…
Pamrod Manufacturing acquired all the assets and liabilities of Stafford Industries on January 1, 20X2, in exchange for 4,000 shares of
Pamrod's $20 par value common stock. Balance sheet data for both companies just before the merger are given as follows:
Balance Sheet Items
Assets
Cash
Accounts Receivable
Inventory
Land
Buildings and Equipment
Less: Accumulated Depreciation
Total Assets
Liabilities and Equities
Accounts Payable
Bonds Payable
Common Stock:
$20 par value
$5 par value
Additional Paid-In Capital
Retained Earnings
Total Liabilities and Equities
Pamrod Manufacturing
Book Value
$ 70,000
100,000
200,000
50,000
600,000}
(250,000)
$ 779,000
$ 50,000
300,000
200,000
40,000
180,000
$ 770,000
Fair Value
70,000
100,000
375,000
80,000
540,000
$1,165,000
$ 50,000
310,000
Stafford Industries
Book Value
$ 30,000
60,000
100,000
40,000
400,000
(150,000)
$ 480,000
$ 10,000
150,000
100,000
20,000
200,000
$ 480,000
Fair Value
$ 30,000
60,000
160,000
30,000
350,000
$630,000
$ 10,000
145,000…
The following are the balances of LITTLE Company and BOY Company as of January 1, 20x1.
Dianne Company
BV
FV
Assets
4,000,000
4,200,000
Liabilities
1,000,000
900,000
Corpuz Company
Book Value
Fair Value
Assets
3,000,000
2,900,000
Liabilities
500,000
600,000
The companies combined their resources and formed CHAN Co. The new company issues 6,000 shares of 500 par value common stocks with fair value of P600 and pays additional 500,000. The company also incurs direct costs of 50,000 and indirect cost of 20,000.
What is the total assets of Dark Co. immediately after the business combination if contingent expenses of P100,000 are estimated to be incurred after 1 yr?
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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