Assume that in the first step of the reorganization, Auto Corp. will exchange $6,190,273 worth of Auto Corp. stock plus land with a fair market value of $976,389 for all of Battery Corp.'s assets. Auto Corp.'s land had a basis of $35,657 prior to the exchange. Battery Corp.'s assets had a basis of $2,859,643 prior to the exchange. Assume that in the second step of the reorganization, Battery Corp. will distribute the $6,190,273 in Auto Corp. stock plus the land that it just acquired from Auto Corp. to Battery Corp.'s sole shareholder, Sydney, in exchange for all of Sydney's shares of Battery Corp. stock. Prior to the exchange, Sydney's basis in her shares of Battery Corp. stock was $3,474,518. Sydney will now be a shareholder of Auto Corp. instead of Battery Corp. What amount of gain/loss will Auto Corp. recognize as a result of the reorganization?
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- Assume that in the first step of the reorganization, Auto Corp. will exchange $6,071,963 worth of Auto Corp. stock plus land with a fair market value of $2,276,714 for all of Battery Corp.'s assets. Auto Corp's land had a basis of $5,761 prior to the exchange. Battery Corp.'s assets had a basis of $1,296,616 prior to the exchange. Assume that in the second step of the reorganization, Battery Corp. will distribute the $6,071,963 in Auto Corp. stock plus the land that it just acquired from Auto Corp. to Battery Corp.'s sole shareholder, Sydney, in exchange for all of Sydney's shares of Battery Corp. stock. Prior to the exchange, Sydney's basis in her shares of Battery Corp. stock was $3,863,473. After the exchange, Sydney will now be a shareholder of Auto Corp. instead of Battery Corp. What amount of gain/loss will Battery Corp. recognize as a result of the reorganization?Accounting Assume that in the first step of the reorganization, Auto Corp. will exchange $6,071,963 worth of Auto Corp. stock plus land with a fair market value of $2,276,714 for all of Battery Corp's assets. Auto Corp's land had a basis of $5,761 prior to the exchange. Battery Corp.'s assets had a basis of $1,296,616 prior to the exchange. Assume that in the second step of the reorganization, Battery Corp. will distribute the $6,071,963 in Auto Corp. stock plus the land that it just acquired from Auto Corp. to Battery Corp.'s sole shareholder, Sydney, in exchange for all of Sydney's shares of Battery Corp. stock. Prior to the exchange, Sydney's basis in her shares of Battery Corp. stock was $3,863,473. After the exchange, Sydney will now be a shareholder of Auto Corp. instead of Battery Corp. What amount of gain/loss will Battery Corp. recognize as a result of the reorganization?In a qualifying reorganization, Cato Corporation exchanges $8,005,000 worth of stock and property valued at $3,202,000 ($1,601,000 basis) for all of Firestar Corporation's assets, which have a value of $11,207,000 and a $2,241,400 basis. Firestar distributes the property received from Cato. The exchange meets all Code requirements. If an amount is zero, enter "0". a. What is Cato's recognized gain/loss from the reorganization? Cato recognizes a gain of $ b. What is Firestar's recognized gain/loss from the reorganization? Firestar recognizes no gain or loss of $
- Assuming that the quasi reorganization shall be accomplished as follows: Property, plant and equipment are to be reduced to their fair market value of P800,000. Inventories are to be written down by P50,000. • Unaccrued obligation shall be recognized at P150,000. • The par value of ordinary Shares will be reduced to P5. 1. What is the balance of the retained earnings account as of 31 December 2019? Assuming that the quasi reorganization shall be accomplished as follows: Property, plant and equipment are to be reduced to their fair market value of P800,000. Inventories are to be written down by P50,000. • Unaccrued obligation shall be recognized at P150,000. • The par value of ordinary Shares will be reduced to P5. 2. What is the balance of the retained earnings account as of 31 December 2019?In a qualifying reorganization, Cato Corporation exchanges $1,200,000 worth of stock and property valued at $500,000 ($245,000 basis) for all of Firestar Cor- poration’s assets, which have a value of $1,700,000 and a $500,000 basis. Firestar dis- tributes the property received from Cato. The exchange meets the § 368 requirements. What is Cato’s recognized gain/loss from the reorganization? What is Firestar’s recognized gain/loss from the reorganization?On January 1, 2024, Morey, Incorporated, exchanged $180,575 for 25 percent of Amsterdam Corporation. Morey appropriately applied the equity method to this investment. At January 1, the book values of Amsterdam’s assets and liabilities approximated their fair values. On June 30, 2024, Morey paid $605,500 for an additional 70 percent of Amsterdam, thus increasing its overall ownership to 95 percent. The price paid for the 70 percent acquisition was proportionate to Amsterdam’s total fair value. At June 30, the carrying amounts of Amsterdam’s assets and liabilities approximated their fair values. Any remaining excess fair value was attributed to goodwill. Amsterdam reports the following amounts at December 31, 2024 (credit balances shown in parentheses): Revenues $ (291,000) Expenses 186,000 Retained earnings, January 1 (237,300) Dividends declared, October 1 10,000 Common stock (500,000) Amsterdam’s revenue and expenses were distributed evenly throughout the year, and no…
- Company Aero is about to acquire 100% of company Berry. Company Berry has identifiable net assets with book value of $300,000 and $500,000 respectively. As payment Company Aero will issue common stock with a fair value of $75,000. How should the transaction be recorded if the acquisition is:a) An acquisition of net assets?b) An acquisition of Company B’s common stock and Company B remains a separate legal entity?Puncho Company is acquiring the net assets of Semos Company in exchange for common stock valued at $900,000. The Semos identifiable net assets have book and fair values of $400,000 and $800,000, respectively. Compare accounting for the acquisition (including assignment of the price paid) by Puncho with accounting for the sale by Semos.If PROMDI Co., a new company would acquire the net assets of CARDO Co and SYANO Co. PROMDI Co will be issuing 30,000 shares to CARDO and 12,000 shares to SYANO. The following is the balance sheet of PROMDI Co, followed by the fair values and additional unpaid costs incurred by PROMDI in the acquisition: REQUIREMENTS: Consolidated Equity at the date of acquisition
- Use the following to answer questions 8 through 10: On May 1, 2021, Jazzie Co. agreed to sell the assets of its Mister Division to Shawna Inc. for $80 million. The sale was completed on December 31, 2021. Jazzie’s year ends on December 31st. The following additional facts pertain to the transaction: The Mister Division qualifies as a component of an entity as defined by GAAP. Mister's net assets totaled $48 million on Jazzie's books at the time of the sale. Mister incurred a pre-tax operating loss of $10 million in 2021. Jazzie’s income tax rate is 40%. In the 2021 income statement for Jazzie Co., they would report after tax income from discontinued operations of: Group of answer choices $9.2 million. $13.2 million. $22 million. $26 million.On January 1, 2020, Paloma Corporation exchanged $1,710,000 cash for 90 percent of the outstanding voting stock of San Marco Company. The consideration transferred by Paloma provided a reasonable basis for assessing the total January 1, 2020, fair value of San Marco Company. At the acquisition date, San Marco reported the following owners' equity amounts in its balance sheet: Common stock Additional paid-in capital Retained earnings In determining its acquisition offer, Paloma noted that the values for San Marco's recorded assets and liabilities approximated their fair values. Paloma also observed that San Marco had developed internally a customer base with an assessed fair value of $800,000 that was not reflected on San Marco's books. Paloma expected both cost and revenue synergies from the combination. At the acquisition date, Paloma prepared the following fair-value allocation schedule: Fair value of San Marco Company Book value of San Marco Company Excess fair value to customer…On January 1, 20X1, Par Inc acquires 85.77% of Sub Corp for $211,625 in cash. Immediately before the acquisition, the book value of Sub's identifiable net assets was $143,426 with a fair value of $161,060, while the book value of Par's net assets was $282,155. What will be the amount of total shareholders' equity on the consolidated balance sheet immediately after the acquisition if the fair-value-enterprise (FVE) method is used? $309,334 b. $333,129 c. $301,402 d. $317,265 e. $325,197