On December 31, 2019, Manama Corporation issued 90,000 shares of its no-par, no-stated-value common stock (current fair value $14 a share) for 36,000 shares of the outstanding $10 par common stock of Bahrain Company. The $100,000 out-of-pocket costs of the business combination paid by Manama on December 31, 2019, were allocable as follows: 45% to finders, legal, and accounting fees directly related to the business combination: 55% to the SEC registration statement for Manama’s common stock issued in the businesses combination. There was no contingent consideration.
Immediately prior to the business combination, separate balance sheets of the constituent companies were as follows:
MANAMA CORPORATION AND BAHRAIN COMPANY
Separate Balance Sheets (prior to business combination)
December 31, 2019
Manama Bahrain Assets
Cash $ 200,000 $ 100,000
Trade accounts receivable (net) 400,000 200,000
Buildings (net) 600,000 300,000
Land (net) 1,300,000 1,000,000
Total assets $ 2,500,000 $ 1,600,000
Liabilities and Stockholders’ Equity
Current liabilities $ 800,000 $ 400,000
Long-term debt 100,000
Common stock, no par or stated value 1,200,000
Common stock, $10 par 400,000
Retained earnings 500,000 700,000
Total liabilities and stockholder’s equity $ 2,500,000 $ 1,600,000
Current fair values of Bahrain’s identifiable net assets differed from their carrying amounts as follows:
Buildings |
$ 250,000 |
Land |
$ 1,300,000 |
Answer : Preparation of working paper elimination entries for the consolidation balance sheet of Manama and subsidiary on December 31, 2019.
Date | Particulars | Debit | Credit |
31-Dec-19 | Cash | $100,000 | |
Trade receivables | $200,000 | ||
Buildings | $250,000 | ||
Land | $1,300,000 | ||
Current Liabilities | $400,000 | ||
Long term Debt | $100,000 | ||
Capital Reserve | $90,000 | ||
Common Stock | $1,260,000 | ||
31-Dec-19 | Expenses Paid on business Combination | $100,000 | |
Cash | $100,000 | ||
31-Dec-19 | Profit & Loss | $100,000 | |
Expenses Paid on business Combination | $100,000 |
Notes :
Purchase Consideration paid by Issuance of Common stock = 90,000 shares x $14 per share = $1,260,000
Calculation of Capital reserve :
Particulars | Amount |
Fair Value of Assets Acquired (100,000 + 200,000 + 250,000 + 1,300,000) | $1,850,000 |
Less : Liabilities (400,000 + 100,000) | ($500,000) |
Fair Value of Net Assets Acquired | $1,350,000 |
Less : Purchase Consideration paid | ($1,260,000) |
Excess of Fair Value of net assets over Purchase price (Capital Reserve) | $90,000 |
On December 31, 2019, Manama Corporation issued 90,000 shares of its no-par, no-stated-value common stock (current...
On December 31, 2019, Manama Corporation issued 90,000 shares of its no-par, no-stated-value common stock (current fair value $14 a share) for 36,000 shares of the outstanding $10 par common stock of Bahrain Company. The $100,000 out-of-pocket costs of the business combination paid by Manama on December 31, 2019, were allocable as follows: 45% to finders, legal, and accounting fees directly related to the business combination: 55% to the SEC registration statement for Manama’s common stock issued in the businesses...
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On December 31, 2019, Manama Corporation issued 90,000 shares of its no-par, no-stated-value common stock (current fair value $14 a share) for 36,000 shares of the outstanding $10 par common stock of Bahrain Company. The $100,000 out-of-pocket costs of the business combination paid by Manama on December 31, 2019, were allocable as follows: 45% to finders, legal, and accounting fees directly related to the business combination: 55% to the SEC registration statement for Manama's common stock issued in...
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Price Company issued 8,220 shares of its $20 par value common
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under which Sims Company will be merged into Price Company.
Although the questions are correct, my question is how do I solve
part "B"?
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Here is financial information for Glitter Inc.
December 31, 2020
December 31, 2019
Current assets
$123,400
$100,000
Plant assets (net)
394,350
330,000
Current liabilities
86,328
72,000
Long-term liabilities
133,280
85,000
Common stock, $1 par
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120,000
Retained earnings
131,702
153,000
Prepare a schedule showing a horizontal analysis for 2020, using
2019 as the base year. (Enter negative amounts and
percentages using either a negative sign preceding the number e.g.
-45, -45% or parentheses e.g. (45), (45%). Round percentages to 1...