In a stock acquisition accounted for by the equity method, a portion of the purchase price...
Homework Answers
In a stock acquisition accounted for by the equity method, there always exists a portion which is attributable to goodwill or to specific assets or liabilities. This portion of acquisition is the excess of the fair market value of the acquired assets and liabilities. The amount is calculated through first determining the amount of the current market value of the acquired assets and liabilities and equating the same with the book value of the acquired specific assets and liabilities. The difference of both is accounted as goodwill. Also, any Research & Development under-going in the company are evaluated on market price and are included the acquisition price. The inclusion of all of these amounts in the acquisition will make the price over and above the total book value of the equity.
In future and subsequent periods, the goodwill and the specific assets get amortized or depreciated during its useful life or carried forward in the consolidated balance sheet.
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In
a stock acquisition accounted for by the equity method, a portion
of the purchase price...
in a stock acquisition accounted for by the equity method, will there always be goodwill? Does...
in a stock acquisition accounted for by the equity method, will there always be goodwill? Does there have to be goodwill?
Consolidation on date of acquisition - Equity method with noncontrolling interest and AAP Assume ...
Consolidation on date of acquisition - Equity method with noncontrolling interest and AAP Assume that a parent company acquires an 80% interest in its subsidiary for a purchase price of $620,800. The excess of the total fair value of the controlling and noncontrolling interests over the book value of the subsidiary's Stockholders' Equity is assigned to a building (in PPE, net) that the parent believes is worth $50,000 more than its book value, an: unrecorded Patent that the parent valued...
c. How does the partial equity method differ from the equity method? a. Under the partial...
c. How does the partial equity method differ from the equity method? a. Under the partial equity method, the balance in the investment account is not decreased by amortization on allocations made in the acquisition of the subsidiary b. In the total assets reported on the consolidated balance sheet In the treatment of dividends d. In the total liabilities reported on the consolidated balance sheet In a business combination when the fair value of the assets and liabilities assumed exceed...
Consolidation on date of acquisition - Equity method with noncontrolling interest and AAP Assume a parent...
Consolidation on date of acquisition - Equity method with noncontrolling interest and AAP Assume a parent company acquires a 75% interest in its subsidiary for a purchase price of $924,000. The excess of the total fair value of the controlling and noncontrolling Interests over the book value of the subsidiary's Stockholders' Equity is assigned to a building in PPE, net) that is worth $88,000 more than its book value, an unrecorded patent with a fair value of $144,000, and Goodwill...
TRUE/FALSE 1. When control is obtained through a stock acquisition, combined financial statements automatically result for...
TRUE/FALSE 1. When control is obtained through a stock acquisition, combined financial statements automatically result for future periods. 2. Tax loss carryovers are generally transferable in a business combination and may be recorded as an asset. 3. In all business combinations, one company gains control over the assets and liabilities of another company. 4. Regardless of the purchase price, the current assets, liabilities, and long-term investments (not including equity method investments) are recorded at fair market value in a business...
Consolidation at the end of the first year subsequent to date of acquisition-Equity method (purchase price...
Consolidation at the end of the first year subsequent to date of acquisition-Equity method (purchase price equals book value) Assume that a parent company acquires its subsidiary on January 1, 2016, by exchanging 40,000 shares of its $1 par value Common Stock, with a market value on the acquisition date of $27 per share, for all of the outstanding voting shares of the acquiree. You have been charged with preparing the consolidation of these two companies at the end of...
Determining ending consolidated balances in the second year following the acquisition—Equity method Assume a parent company...
Determining ending consolidated balances in the second
year following the acquisition—Equity
method
Assume a parent company acquired a subsidiary on January 1,
2015. The purchase price was $745,000
in excess of the subsidiary’s book value of Stockholders’ Equity
on the acquisition date, and that excess
was assigned to the following [A] assets:
37. Determining euding consolidated balances in the second year following the acquisition-Equity method Assume a parent company acquired a subsidiary on January 1, 2015. The purchase price was...
Consolidation at date of acquisition (purchase price greater than book value, acquisition journal entries, deferred tax...
Consolidation at date of acquisition (purchase price greater than book value, acquisition journal entries, deferred tax liability) Assume that the parent company acquires its subsidiary by exchanging 118,000 shares of its $1 par value Common Stock, with a market value on the acquisition date of $30 per share, for all of the outstanding voting shares of the investee. In its analysis of the investee company, the parent values all of the subsidiary's assets and liabilities at an amount equaling their...
Consolidation at date of acquisition (purchase price greater than book value, acquisition journal entries, deferred tax...
Consolidation at date of acquisition (purchase price greater than book value, acquisition journal entries, deferred tax liability) Assume that the parent company acquires its subsidiary by exchanging 118,000 shares of its $1 par value Common Stock, with a market value on the acquisition date of $30 per share, for all of the outstanding voting shares of the investee. In its analysis of the investee company, the parent values all of the subsidiary's assets and liabilities at an amount equaling their...
Consolidation at date of acquisition (purchase price greater than book value, acquisition journal entries Assume that...
Consolidation at date of acquisition (purchase price
greater than book value, acquisition journal entries
Assume that the parent company acquires its subsidiary by
exchanging 84,000 shares of its $2 par value Common Stock, with a
fair value on the acquisition date of $44 per share, for all of the
outstanding voting shares of the investee. In its analysis of the
investee company, the parent values all of the subsidiary’s assets
and liabilities at an amount equaling their book values except...
Consolidation on date of acquisition - Equity method with noncontrolling interest and AAP Assume that a parent company acquires an 80% interest in its subsidiary for a purchase price of $620,800. The excess of the total fair value of the controlling and noncontrolling interests over the book value of the subsidiary's Stockholders' Equity is assigned to a building (in PPE, net) that the parent believes is worth $50,000 more than its book value, an: unrecorded Patent that the parent valued...
c. How does the partial equity method differ from the equity method? a. Under the partial equity method, the balance in the investment account is not decreased by amortization on allocations made in the acquisition of the subsidiary b. In the total assets reported on the consolidated balance sheet In the treatment of dividends d. In the total liabilities reported on the consolidated balance sheet In a business combination when the fair value of the assets and liabilities assumed exceed...
Consolidation on date of acquisition - Equity method with noncontrolling interest and AAP Assume a parent company acquires a 75% interest in its subsidiary for a purchase price of $924,000. The excess of the total fair value of the controlling and noncontrolling Interests over the book value of the subsidiary's Stockholders' Equity is assigned to a building in PPE, net) that is worth $88,000 more than its book value, an unrecorded patent with a fair value of $144,000, and Goodwill...
TRUE/FALSE 1. When control is obtained through a stock acquisition, combined financial statements automatically result for future periods. 2. Tax loss carryovers are generally transferable in a business combination and may be recorded as an asset. 3. In all business combinations, one company gains control over the assets and liabilities of another company. 4. Regardless of the purchase price, the current assets, liabilities, and long-term investments (not including equity method investments) are recorded at fair market value in a business...
Consolidation at the end of the first year subsequent to date of acquisition-Equity method (purchase price equals book value) Assume that a parent company acquires its subsidiary on January 1, 2016, by exchanging 40,000 shares of its $1 par value Common Stock, with a market value on the acquisition date of $27 per share, for all of the outstanding voting shares of the acquiree. You have been charged with preparing the consolidation of these two companies at the end of...
Determining ending consolidated balances in the second
year following the acquisition—Equity
method
Assume a parent company acquired a subsidiary on January 1,
2015. The purchase price was $745,000
in excess of the subsidiary’s book value of Stockholders’ Equity
on the acquisition date, and that excess
was assigned to the following [A] assets:
37. Determining euding consolidated balances in the second year following the acquisition-Equity method Assume a parent company acquired a subsidiary on January 1, 2015. The purchase price was...
Consolidation at date of acquisition (purchase price
greater than book value, acquisition journal entries
Assume that the parent company acquires its subsidiary by
exchanging 84,000 shares of its $2 par value Common Stock, with a
fair value on the acquisition date of $44 per share, for all of the
outstanding voting shares of the investee. In its analysis of the
investee company, the parent values all of the subsidiary’s assets
and liabilities at an amount equaling their book values except...
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