A) Determination of Fair Value of shares of Vega - On the date of Acquisition.
Total no. of shares of Vega Ltd. 15,000/15% = 100,000.
Total Net Assets = 6,450,000 (Book Value of Net Assets as given in question)
Fair Value for the year 1 = Book value of Net Assets (Hence book value of assets remained unchanged irrespective of change in year)
Fair Value Per share = 6,450,000/100,000 = 64.50
Fair Value of 15,000 shares = 64.50 * 15,000 = 967,500
B) Computation of revaluation gain or loss in respect of 15,000 shares purchase in Year 1 ( question restrict to consider shares purchase in year 2)
Fair Value of Assets = 6,850,000
Total No of shares = 100,000 (remained unchanged)
Fair value per share = 6,850,000/100,000 = 68.50
Fair Value of 15,000 shares = 68.50 * 15,000 = 1,027,500
Alternative 1 (if we recorded value of share at the time of purchase on the Purchase Price (15000*60 = 900,000))
Gain due to revaluation is = 1,027,500 - 900,000 = 127,500
Alternative 2 (if we recorded value of share at the time of purchase on the Fair Value)
Gain due to revaluation is = 1,027,500 - 967,500 = 60,000
Problem 2 (15 points) On January 1. Year 1. Reaser Corporation (RC) acquired 15 percent (15.000...
Parent Corporation acquired 100% of Sub Co. on January 1, Year 1 by issuing 25,000 shares of $1 par common stock (fair value $25 per share). Sub reported retained earnings of $350,000 and total stockholders' equity of $480,000 at that time. On that date, Sub had royalty agreements (6-year life) that were undervalued on its books by $60,000. In addition, Sub owned a copyright (10-year life) that was not reflected on its books that had a fair value of $50,000....
On January 1, Patterson Corporation acquired 80 percent of the 100,000 outstanding voting shares of Soriano, Inc., in exchange for $31.25 per share cash. The remaining 20 percent of Soriano's shares continued to trade for $30 both before and after Patterson's acquisition At January 1, Soriano's book and fair values were as follows: Remaining Life Current assets Buildings and equipment Trademarks Patented technology Values $ 80,000 1,000,000 900,000 2,000,000 5 years 10 years 4 years Book Values 80,000 1,250,000 700,000...
Patrick Corporation acquired 100 percent of O'Brien Company's outstanding common stock on January 1, for $636,200 in cash. O'Brien reported net assets with a carrying amount of $353,000 at that time. Some of O'Brien's assets either were unrecorded (having been internally developed) or had fair values that differed from book values as follows: Trademarks (indefinite life) Customer relationships (5-year remaining life) Equipment (10-year remaining life) Book Values $ 90,500 0 369,000 Fair Values $ 255,500 85,200 320,100 Any goodwill is...
Patrick Corporation acquired 100 percent of O'Brien Company's outstanding common stock on January 1, for $550,000 in cash. O'Brien reported net assets with a carrying amount of $350,000 at that time. Some of O'Brien's assets either were unrecorded (having been internally developed) or had fair values that differed from book values as follows: Book Values $ 60,000 Trademarks (indefinite life) ...... Customer relationships (5-year remaining life) ... Equipment (10-year remaining life) ... Fair Values $160,000 75,000 312,000 342.000 Any goodwill...
Plummer corporation acquired 90 percent of Softek Technologies' voting stock by issuing 200,000 shares of $1 par common stock with a fair value of $100,000,000. In addition, Plummer paid $2,000,000 in cash to the consultants and accountants who advised in the acquisition. Softek's shareholders' equity at eh date of the acquisition is as follows: Common Stock $400,000 Additional paid-in capital $20,000,000 Retained deficit -$10,000,000 Accumulated other comprehensive loss -$1,000,000 Treasury stock -$500,000 Total $8,900,000 Softek's assets and liabilities were carried...
Patrick Corporation acquired 100 percent of O’Brien Company’s outstanding common stock on January 1, for $796,500 in cash. O’Brien reported net assets with a carrying amount of $448,000 at that time. Some of O’Brien’s assets either were unrecorded (having been internally developed) or had fair values that differed from book values as follows: Book Values Fair Values Trademarks (indefinite life) $ 102,000 $ 299,000 Customer relationships (5-year remaining life) 0 96,600 Equipment (10-year remaining life) 359,000 329,000 Any goodwill is...
Patrick Corporation acquired 100 percent of O’Brien Company’s outstanding common stock on January 1, for $796,500 in cash. O’Brien reported net assets with a carrying amount of $448,000 at that time. Some of O’Brien’s assets either were unrecorded (having been internally developed) or had fair values that differed from book values as follows: Book Values Fair Values Trademarks (indefinite life) $ 102,000 $ 299,000 Customer relationships (5-year remaining life) 0 96,600 Equipment (10-year remaining life) 359,000 329,000 Any goodwill is...
Patrick Corporation acquired 100 percent of O’Brien Company’s outstanding common stock on January 1, for $638,600 in cash. O’Brien reported net assets with a carrying amount of $422,000 at that time. Some of O’Brien’s assets either were unrecorded (having been internally developed) or had fair values that differed from book values as follows: Book Values Fair Values Trademarks (indefinite life) $ 80,000 $ 194,000 Customer relationships (5-year remaining life) 0 98,100 Equipment (10-year remaining life) 390,000 333,000 Any goodwill is...
Patrick Corporation acquired 100 percent of O’Brien Company’s outstanding common stock on January 1, for $646,100 in cash. O’Brien reported net assets with a carrying amount of $406,000 at that time. Some of O’Brien’s assets either were unrecorded (having been internally developed) or had fair values that differed from book values as follows: Book Values Fair Values Trademarks (indefinite life) $ 78,000 $ 214,000 Customer relationships (5-year remaining life) 0 80,700 Equipment (10-year remaining life) 420,000 371,700 Any goodwill is...
Patrick Corporation acquired 100 percent of O’Brien Company’s outstanding common stock on January 1, for $638,600 in cash. O’Brien reported net assets with a carrying amount of $422,000 at that time. Some of O’Brien’s assets either were unrecorded (having been internally developed) or had fair values that differed from book values as follows: Book Values Fair Values Trademarks (indefinite life) $ 80,000 $ 194,000 Customer relationships (5-year remaining life) 0 98,100 Equipment (10-year remaining life) 390,000 333,000 Any goodwill is...