Homework Answers
The difference between the fair value of net assets acquired and consideration paid is actually treated as purchased goodwill in the balance sheet or statement of financial position. since there is no option for goodwill treatment; the answer should be
A. the $45000 difference should be credited to retained earnings.
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QUESTION 5 Wilder Company purchased the net assets of Stocks Company for $225,000. On the date...
During 2021, Blossom Company purchased the net assets of Crane Corporation for $2226400. On the date...
During 2021, Blossom Company purchased the net assets of Crane Corporation for $2226400. On the date of the transaction, Crane had $607200 of liabilities. The fair value of Crane's assets when acquired were as follows: Current assets $1092960 Noncurrent assets 2550240 $3643200 How should the $809600 difference between the fair value of the net assets acquired ($3036000) and the cost ($2226400) be accounted for by Blossom? The current assets should be recorded at $1092960 and the noncurrent assets should be...
14. Purchased goodwill. Company A has the following net assets: Liabilities & Equity Carrying Value Assets...
14. Purchased goodwill. Company A has the following net assets: Liabilities & Equity Carrying Value Assets Cash Accounts receivable Inventory PPE (net) Carrying Value $25,000 Current liabilities 35,000 Common stock 42,000 Retained earnings $55,000 100,000 100,000 153,000 Totals $255,000 $255,000 The fair values of Company A are Assets Cash Accounts receivable Inventory PPE (net) Patents Liabilities Fair Value $25,000 35,000 122,000 205,000 18,000 (55,000 Fair value of net assets $350,000 Company B purchases Company A for $400,000. Write the journal...
Tax effects of business combinations (nontaxable, market value differs from book value) Assume that on January...
Tax effects of business combinations (nontaxable, market value differs from book value) Assume that on January 1, 2013, an investor company acquired 100% of the outstanding voting common stock of an investee company in exchange for $225,000 worth of investor company common stock. The transaction is a tax-free reorganization under the Internal Revenue Code. The following financial statement information is for the investor company and the investee company on January 1, 2013, prepared immediately before this transaction. Book Values Investor...
3. Under the provisions of the business combination rules, when the fair value of identifiable net assets acquired exce...
3. Under the provisions of the business combination rules, when the fair value of identifiable net assets acquired exceeds the investment cost, which of the following statements is correct? A) A gain from a bargain purchase is recognized for the amount that the fair value of the identifiable net assets acquired exceeds the acquisition price. B) The difference is allocated first to reduce proportionately (according to market value) non-current assets, then to non-monetary current assets, and any negative remainder is...
5 through 8 current assets of the acquired firm. 5. What is the appropriate accounting treatment...
5 through 8
current assets of the acquired firm. 5. What is the appropriate accounting treatment for the value assigned to in process research and devel- opment acquired in a business combination? a. Expense upon acquisition. b. Capitalize as an asset. C Expense if there is no alternative use for the assets used in the research and development and technological feasibility has yet to be reached. d. Expense until future economic benefits become certain and then capitalize as an asset...
QUESTION 18 Long term assets of the acquired company are reduced in proportion to their fair...
QUESTION 18 Long term assets of the acquired company are reduced in proportion to their fair values and any excess is recorded as a deferred credit (negative goodwill) when the purchase price of the acquired company is less than fair value of net assets acquired. True False
Question 18-20 are based off this sane chart 2019 2018 2017 (At December 31) Current assets...
Question 18-20 are based off this sane chart
2019 2018 2017 (At December 31) Current assets Tangible fixed assets Intangible assets. Total assets.. $285,000 662,500 40.000 $987,500 $277.500 575,000 45,000 $897.500 $207.000 563.000 50,000 $320,000 Current liabilities Noncurrent liabilities Common stock Additional pald-in capital Retained earnings Stockholders' equity Total liabilities and equity $120,000 266,250 100,000 100,000 400,000 600,000 $110,000 242,500 100,000 100.000 345,000 545,000 $897500 $100,000 220,000 100,000 100,000 300,000 500,000 $820,000 $986250 2012 2018 (For the years ended December...
On December 31, Year 1, Company A purchased 75% of Company B’s outstanding common shares for...
On December 31, Year 1, Company A purchased 75% of Company B’s outstanding common shares for $150,000 in cash. On that date, the carrying amount of Company B’s assets and liabilities approximated their fair value, and the fair value of the noncontrolling interest (NCI) was $12,000. The following is the summarized balance sheet information for the two companies on December 31, Year 1, before the acquisition. Company A Company B Current assets $200,000 $ 80,000 Noncurrent assets 320,000 140,000 Current...
Assume that on January 1, 2013, an investor company acquired 100% of the outstanding voting common...
Assume that on January 1, 2013, an investor company acquired 100% of the outstanding voting common stock of an investee company. The following financial statement information is for the investor company and the investee company on January 1, 2013, prepared immediately before this transaction. Book Values Investor Investee Receivables & inventaries $150,000 $75,000 Land 300,000 150,000 Property & equipment 337,500 150,000 Total assets $787,500 $375,000 Liabilities $225,000 $120,000 Common stock ($2 par) 30,000 15,000 Additional paid-in capital 420,000 225,000 Retained...
Pritano Company acquired all the net assets of Succo Company on December 31, 2018, for $2,160,000...
Pritano Company acquired all the net assets of Succo Company on December 31, 2018, for $2,160,000 cash. The balance sheet of Succo Company immediately prior to the acquisition showed: Book value Fair value Current assets $ 960,000 $ 960,000 Plant and equipment 1,080,000 1,440,000 Total $2,040,000 $2,400,000 Liabilities $ 180,000 $ 216,000 Common stock 480,000 Other contributed capital 600,000 Retained earnings 780,000 Total $2,040,000 As part of the negotiations, Pritano agreed to pay the stockholders of Succo $360,000 cash if...
During 2021, Blossom Company purchased the net assets of Crane Corporation for $2226400. On the date of the transaction, Crane had $607200 of liabilities. The fair value of Crane's assets when acquired were as follows: Current assets $1092960 Noncurrent assets 2550240 $3643200 How should the $809600 difference between the fair value of the net assets acquired ($3036000) and the cost ($2226400) be accounted for by Blossom? The current assets should be recorded at $1092960 and the noncurrent assets should be...
14. Purchased goodwill. Company A has the following net assets: Liabilities & Equity Carrying Value Assets Cash Accounts receivable Inventory PPE (net) Carrying Value $25,000 Current liabilities 35,000 Common stock 42,000 Retained earnings $55,000 100,000 100,000 153,000 Totals $255,000 $255,000 The fair values of Company A are Assets Cash Accounts receivable Inventory PPE (net) Patents Liabilities Fair Value $25,000 35,000 122,000 205,000 18,000 (55,000 Fair value of net assets $350,000 Company B purchases Company A for $400,000. Write the journal...
Tax effects of business combinations (nontaxable, market value differs from book value) Assume that on January 1, 2013, an investor company acquired 100% of the outstanding voting common stock of an investee company in exchange for $225,000 worth of investor company common stock. The transaction is a tax-free reorganization under the Internal Revenue Code. The following financial statement information is for the investor company and the investee company on January 1, 2013, prepared immediately before this transaction. Book Values Investor...
3. Under the provisions of the business combination rules, when the fair value of identifiable net assets acquired exceeds the investment cost, which of the following statements is correct? A) A gain from a bargain purchase is recognized for the amount that the fair value of the identifiable net assets acquired exceeds the acquisition price. B) The difference is allocated first to reduce proportionately (according to market value) non-current assets, then to non-monetary current assets, and any negative remainder is...
5 through 8
current assets of the acquired firm. 5. What is the appropriate accounting treatment for the value assigned to in process research and devel- opment acquired in a business combination? a. Expense upon acquisition. b. Capitalize as an asset. C Expense if there is no alternative use for the assets used in the research and development and technological feasibility has yet to be reached. d. Expense until future economic benefits become certain and then capitalize as an asset...
QUESTION 18 Long term assets of the acquired company are reduced in proportion to their fair values and any excess is recorded as a deferred credit (negative goodwill) when the purchase price of the acquired company is less than fair value of net assets acquired. True False
Question 18-20 are based off this sane chart
2019 2018 2017 (At December 31) Current assets Tangible fixed assets Intangible assets. Total assets.. $285,000 662,500 40.000 $987,500 $277.500 575,000 45,000 $897.500 $207.000 563.000 50,000 $320,000 Current liabilities Noncurrent liabilities Common stock Additional pald-in capital Retained earnings Stockholders' equity Total liabilities and equity $120,000 266,250 100,000 100,000 400,000 600,000 $110,000 242,500 100,000 100.000 345,000 545,000 $897500 $100,000 220,000 100,000 100,000 300,000 500,000 $820,000 $986250 2012 2018 (For the years ended December...
Assume that on January 1, 2013, an investor company acquired 100% of the outstanding voting common stock of an investee company. The following financial statement information is for the investor company and the investee company on January 1, 2013, prepared immediately before this transaction. Book Values Investor Investee Receivables & inventaries $150,000 $75,000 Land 300,000 150,000 Property & equipment 337,500 150,000 Total assets $787,500 $375,000 Liabilities $225,000 $120,000 Common stock ($2 par) 30,000 15,000 Additional paid-in capital 420,000 225,000 Retained...
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