Exercise 2-9 Company S has no long-term marketable securities. Assume the following scenarios: Case A Assume...
Exercise 2-9
Company S has no long-term marketable securities. Assume the
following scenarios:
Case A
Assume that P Company paid $132,200 cash for 100% of the net assets
of S Company.
|
S COMPANY |
||||||||
|
Assets |
||||||||
| Current Assets | Long-lived Assets | Liabilities | Net Assets | |||||
| Book Value | $15,440 | $80,850 | $19,720 | $76,570 | ||||
| Fair Value | 21,890 | 122,330 | 28,810 | 115,410 | ||||
Case B
Assume that P Company paid $110,970 cash for 100% of the net assets
of S Company.
|
S COMPANY |
||||||||
|
Assets |
||||||||
| Current Assets | Long-lived Assets | Liabilities | Net Assets | |||||
| Book Value | $15,440 | $80,850 | $19,720 | $76,570 | ||||
| Fair Value | 29,450 | 85,020 | 19,590 | 94,880 | ||||
Case C
Assume that P Company paid $14,930 cash for 100% of the net assets
of S Company.
|
S COMPANY |
||||||||
|
Assets |
||||||||
| Current Assets | Long-lived Assets | Liabilities | Net Assets | |||||
| Book Value | $15,440 | $80,850 | $19,720 | $76,570 | ||||
| Fair Value | 20,910 | 36,290 | 38,980 | 18,220 | ||||
Complete the following schedule by listing the amount that would be
recorded on P’s books.
| Assets | Retained Earnings | |||||||||
| Goodwill | Current Assets | Long-lived Assets | Liabilities | (Gain) | ||||||
| Case A | $ | $ | $ | $ | $ | |||||
| Case B | ||||||||||
| Case C |
Homework Answers
| Goodwill | Current Assets | Long Lived Assets | Liabilities | Retained Earnings (Gain in income statement) | |
| CASE A | 16790 | 21890 | 122330 | 28810 | |
| CASE B | 16090 | 29450 | 85020 | 19590 | |
| CASE C | 20910 | 36290 | 38980 | 3290 |
Working Note:
| Goodwill (Gain) | Purchase Price | Less: Fair value of net assets | Goodwill (Gain) |
| CASE A | 132200 | 115410 | 16790 |
| CASE B | 110970 | 94880 | 16090 |
| CASE C | 14930 | 18220 | -3290 |
Add Answer to:
Exercise 2-9
Company S has no long-term marketable securities. Assume the
following scenarios:
Case A
Assume...
Company S has no long-term marketable securities. Assume the following scenarios: Case A Assume that P...
Company S has no long-term marketable securities. Assume the following scenarios: Case A Assume that P Company paid $134,910 cash for 100% of the net assets of S Company. S COMPANY Assets Current Assets Long-lived Assets Liabilities Net Assets Book Value $14,770 $85,340 $18,920 $81,190 Fair Value 21,580 117,830 30,700 108,710 Case B Assume that P Company paid $109,090 cash for 100% of the net assets of S Company. S COMPANY Assets Current Assets Long-lived Assets Liabilities Net Assets Book...
Case A Target's Books Current Assets Long-term Assets Liabilities Book Value $15,000.00 $85,000.00 $20,000.00 Fair Value...
Case A Target's Books Current Assets Long-term Assets Liabilities Book Value $15,000.00 $85,000.00 $20,000.00 Fair Value $20,000.00 $130,000.00 $30,000.00 Assume Parent offers $150,000 for 100% of Target's net assets. Case B Target's Books Current Assets Long-term Assets Liabilities Book Value $15,000.00 $85,000.00 $20,000.00 Fair Value $30,000.00 $80,000.00 $20,000.00 Assume Parent offers $130,000 for 100% of Target's net assets. Case C Target's Books Current Assets Long-term Assets Liabilities Book Value $15,000.00 $85,000.00 $20,000.00 Fair Value $40,000.00 $60,000.00 $60,000.00 Assume Parent offers...
Exercise 12-19 Investment securities and equity method investments compared [LO12-5, 12-6] As a long-term investment, Painters'...
Exercise 12-19 Investment securities and equity method investments compared [LO12-5, 12-6] As a long-term investment, Painters' Equipment Company purchased 20% of AMC Supplies Inc.'s 480,000 shares for $560,000 at the beginning of the fiscal year of both companies. On the purchase date, the fair value and book value of AMC’s net assets were equal. During the year, AMC earned net income of $330,000 and distributed cash dividends of 25 cents per share. At year-end, the fair value of the shares...
TUDIN #2 2016 for company purchased 80% of the outstanding common stock of S Company on January 2, 2016, for $380,0...
TUDIN #2 2016 for company purchased 80% of the outstanding common stock of S Company on January 2, 2016, for $380,000. Balance sheets for P Company and follows: ce sheets for P Company and S Company immediately after the stock acquisition were as Current assets Investment in S Company Plant and equipment (net) Land P Company $ 166,000 380,000 560,000 40,000 $1,146,000 S Company $ 96,000 -0- 224.000 120,000 $440,000 Current liabilities Long-term notes payable Common stock Other contributed capital...
As a long-term investment, Painters' Equipment Company purchased 25% of AMC Supplies Inc.'s 490.000 shares for...
As a long-term investment, Painters' Equipment Company purchased 25% of AMC Supplies Inc.'s 490.000 shares for $570,000 at the beginning of the fiscal year of both companies. On the purchase date, the fair value and book value of AMC's net assets were equal During the year, AMC earned net income of $340,000 and distributed cash dividends of 20 cents per share. At year-end, the fair value of the shares is $604,000 Required: 1. Assume no significant influence was acquired. Prepare...
As a long-term investment, Painters' Equipment Company purchased 25% of AMC Supplies Inc.'s 410,000 shares for...
As a long-term investment, Painters' Equipment Company purchased 25% of AMC Supplies Inc.'s 410,000 shares for $490,000 at the beginning of the fiscal year of both companies. On the purchase date, the fair value and book value of AMC’s net assets were equal. During the year, AMC earned net income of $260,000 and distributed cash dividends of 20 cents per share. At year-end, the fair value of the shares is $516,000. Required: 1. Assume no significant influence was acquired. Prepare...
Assume that the following balance sheets are stated at book value. Jurion Co. Current assets $...
Assume that the following balance sheets are stated at book
value.
Jurion Co.
Current assets
$
29,000
Current liabilities
$
6,200
Net fixed assets
34,100
Long-term debt
10,400
Equity
46,500
Total
$
63,100
Total
$
63,100
James, Inc.
Current assets
$
5,700
Current liabilities
$
3,200
Net fixed assets
10,000
Long-term debt
2,500
Equity
10,000
Total
$
15,700
Total
$
15,700
Suppose the fair market value of James's fixed assets is $16,100
versus the $10,000 book value shown. Jurion pays...
The Dunder Mifflin Company has total assets of $153,645,000, current liabilities of $56,880,400, and long-term liabilities...
The Dunder Mifflin Company has total assets of $153,645,000, current liabilities of $56,880,400, and long-term liabilities of $ 71,935,800. The firm has 1,153,030 shares of common stock outstanding. Compute the firm's book value per share (that is, book value of equity divided by number of shares of common stock outstanding)
P company purchased a 70% interest in S company on January 1, 2015 for $3,000,000. The book value...
P company purchased a 70% interest in S company on January 1, 2015 for $3,000,000. The book value and fair value of the assets and liabilities of S company on that day were: BOOK VALUE FAIR VALUE Current assets $700,000 700,000 Equipment 1,600,000 2,000,000 Land 500,000 700,000 Deferred charge 400,000 400,000 Total Assets 3,200,000 3,800,000 Less: Liabilities (700,000) (700,000) Net Assets: 2,500,000 3,100,000 The equipment had a remaining useful life of 8 years on January 1, 2015 and the deferred...
Consolidated Workpaper: Two Cases LO 8 LO 9 The two following separate cases show the financial...
Consolidated Workpaper: Two Cases LO 8 LO 9 The two following separate cases show the financial position of a parent company and its subsidiary company on November 30, 2019, just after the parent had purchased 90% of the subsidiary's stock: Case I Case II P Company S Company P Company S Company Current assets $ 880,000 $260,000 $ 780,000 $280,000 Investment in S Company 190,000 190,000 Long-term assets 1,400,000 400,000 1,200,000 400,000 Other assets _90,000 40,000__70,000__70,000 Total $2,560,000 $700,000 $2,240,000...
Company S has no long-term marketable securities. Assume the following scenarios: Case A Assume that P Company paid $134,910 cash for 100% of the net assets of S Company. S COMPANY Assets Current Assets Long-lived Assets Liabilities Net Assets Book Value $14,770 $85,340 $18,920 $81,190 Fair Value 21,580 117,830 30,700 108,710 Case B Assume that P Company paid $109,090 cash for 100% of the net assets of S Company. S COMPANY Assets Current Assets Long-lived Assets Liabilities Net Assets Book...
Case A Target's Books Current Assets Long-term Assets Liabilities Book Value $15,000.00 $85,000.00 $20,000.00 Fair Value $20,000.00 $130,000.00 $30,000.00 Assume Parent offers $150,000 for 100% of Target's net assets. Case B Target's Books Current Assets Long-term Assets Liabilities Book Value $15,000.00 $85,000.00 $20,000.00 Fair Value $30,000.00 $80,000.00 $20,000.00 Assume Parent offers $130,000 for 100% of Target's net assets. Case C Target's Books Current Assets Long-term Assets Liabilities Book Value $15,000.00 $85,000.00 $20,000.00 Fair Value $40,000.00 $60,000.00 $60,000.00 Assume Parent offers...
TUDIN #2 2016 for company purchased 80% of the outstanding common stock of S Company on January 2, 2016, for $380,000. Balance sheets for P Company and follows: ce sheets for P Company and S Company immediately after the stock acquisition were as Current assets Investment in S Company Plant and equipment (net) Land P Company $ 166,000 380,000 560,000 40,000 $1,146,000 S Company $ 96,000 -0- 224.000 120,000 $440,000 Current liabilities Long-term notes payable Common stock Other contributed capital...
As a long-term investment, Painters' Equipment Company purchased 25% of AMC Supplies Inc.'s 490.000 shares for $570,000 at the beginning of the fiscal year of both companies. On the purchase date, the fair value and book value of AMC's net assets were equal During the year, AMC earned net income of $340,000 and distributed cash dividends of 20 cents per share. At year-end, the fair value of the shares is $604,000 Required: 1. Assume no significant influence was acquired. Prepare...
Assume that the following balance sheets are stated at book
value.
Jurion Co.
Current assets
$
29,000
Current liabilities
$
6,200
Net fixed assets
34,100
Long-term debt
10,400
Equity
46,500
Total
$
63,100
Total
$
63,100
James, Inc.
Current assets
$
5,700
Current liabilities
$
3,200
Net fixed assets
10,000
Long-term debt
2,500
Equity
10,000
Total
$
15,700
Total
$
15,700
Suppose the fair market value of James's fixed assets is $16,100
versus the $10,000 book value shown. Jurion pays...
The Dunder Mifflin Company has total assets of $153,645,000, current liabilities of $56,880,400, and long-term liabilities of $ 71,935,800. The firm has 1,153,030 shares of common stock outstanding. Compute the firm's book value per share (that is, book value of equity divided by number of shares of common stock outstanding)
Consolidated Workpaper: Two Cases LO 8 LO 9 The two following separate cases show the financial position of a parent company and its subsidiary company on November 30, 2019, just after the parent had purchased 90% of the subsidiary's stock: Case I Case II P Company S Company P Company S Company Current assets $ 880,000 $260,000 $ 780,000 $280,000 Investment in S Company 190,000 190,000 Long-term assets 1,400,000 400,000 1,200,000 400,000 Other assets _90,000 40,000__70,000__70,000 Total $2,560,000 $700,000 $2,240,000...
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