Advanced Accounting
12th Edition
ISBN: 9781305084858
Author: Paul M. Fischer, William J. Tayler, Rita H. Cheng
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 1, Problem 1.2.1C
To determine
Introduction: Acquisition is a corporate term used to represent purchase of another company and gaining the ownership of the company.
To Classify: The type of merger in the given scenario.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
On June 30, 2014, PC Company purchased all of the common stock of Silicon Company by issuing 100,000 shares of its $1 par value common stock, with a market value of $25/share. PC Company incurred $400,000 in registration and issuing costs, and $250,000 in consulting and legal fees, paid in cash. The book value of Silicon Company at the date of acquisition was $1,000,000, consisting of capital stock of $560,000, retained earnings of $280,000 (credit balance), treasury stock of $35,000, and accumulated other comprehensive income of $195,000 (credit balance). The carrying values of Silicon's reported assets and liabilities approximate fair value, but it has $700,000 in customer lists, not reported on its balance sheet.
PC's journal entry to record this acquisition includes a credit to additional paid in capital?
PC's journal entry to record this acquisition includes a debit to investment in Silicon?
What is the Eliminating entry
Eliminating entry a debit of goodwill are?
What are the…
10
On July 1, 2015, Cleopatra Corporation acquired 25% of the shares of Marcus, Inc. for P1,000,000. At that date, the equity of Marcus was P4,000,000, with all the identifiable assets and liabilities being measured at amounts equal to fair value. The table below shows the profits and losses made by Marcus during 2015 to 2019:
Year
Profit (Loss)
2015
200,000
2016
2,000,000
2017
2,500,000
2018
160,000
2019
300,000
How much will the Investment in Associate account be debited/credited in 2018?
Group of answer choices
No entry
P40,000 Dr.
P1,035,000 Cr.
P1,060,000 Cr.
During the year 2017, Nestle Corp. sold 2,000 shares of Polland Co. for P114,600 and purchased 2,000 more
shares of Lj Inc. and 1,000 shares of Dwarfy Company. On December 31, 2017, Nestle's equity securities
portfolio consisted of the following:
Quantity
1,000 shares
2,000 shares
1,000 shares
2,000 shares
Investment
Cost
Fair value
Lj, Ic.
Lj, Inc.
Dwarfy Company
Alabang Corp.
P45,000
99,000
48,000
216,000
P60,000
120,000
36,000
66,000
Totals
P408,000
P282,000
What is the gain or loss on the sale of Polland Co. investment?
5,400 gain
5,400 loss
11,400 gain
a.
b.
С.
d.
11,400 loss
What is the carrying amount of the investments on December 31, 2017?
408,000
444,000
c. 282,000
d. 246,000
a
b.
What amount of unrealized gain or loss should be reported in the income statement for the year ended December
31, 2017?
P126,000 unrealized gain
P126,000 unrealized loss
a.
b.
P108,000 unrealized gain
d. P108,000 unrealized loss
с.
Chapter 1 Solutions
Advanced Accounting
Ch. 1 - Prob. 1UTICh. 1 - Prob. 3UTICh. 1 - Prob. 4UTICh. 1 - Prob. 5UTICh. 1 - Prob. 6UTICh. 1 - Prob. 7UTICh. 1 - Prob. 8UTICh. 1 - Prob. 9UTICh. 1 - Prob. 10UTICh. 1 - Prob. 1.1E
Ch. 1 - Prob. 1.2ECh. 1 - Prob. 1.3ECh. 1 - Prob. 2ECh. 1 - Prob. 5.1ECh. 1 - Prob. 5.2ECh. 1 - Prob. 6ECh. 1 - Lake craft Company has the following balance...Ch. 1 - Prob. 8.2ECh. 1 - Prob. 8.3ECh. 1 - Prob. 9.1ECh. 1 - Prob. 9.2ECh. 1 - Prob. 1A.1.1AECh. 1 - Prob. 1A.1.2AECh. 1 - Prob. 1.2PCh. 1 - Prob. 1.3.1PCh. 1 - Prob. 1.4PCh. 1 - Jack Company is a Corporation that was organized...Ch. 1 - Prob. 1.6PCh. 1 - Prob. 1.7.1PCh. 1 - Prob. 1.7.2PCh. 1 - Prob. 1.8PCh. 1 - Prob. 1.10.A1PCh. 1 - Prob. 1.11PCh. 1 - Prob. 1.12PCh. 1 - Prob. 1.13.2PCh. 1 - Prob. 1A.1.1APCh. 1 - Prob. 1A.1.2APCh. 1 - (Note: The use 01 a financial calculator or Excel...Ch. 1 - Frontier does not have publicly traded stock. You...Ch. 1 - Frontier does not have publicly traded stock. You...Ch. 1 - Prob. 1.1B.3CCh. 1 - Prob. 1.1CCCh. 1 - Prob. 1.2.1CCh. 1 - Prob. 1.2.2CCh. 1 - Case 1-2 Disney Acquires Marvel Entertainment On...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- AB Inc. acquired 100% stake in CD Inc. on January 1, 2013 by issuing 20,000 shares of common stock. The shares have a fair value of $15 per share. AB also paid $30,000 in stock issuance costs. Just before acquisition, AB had Common stock of $360,000 and Additional paid-in capital of 20,000. CD had Common stock of $80,000 and Additional paid- in capital of $40,000 and Retained earnin of Assuming both companies continue to operate separately, consolidation entry (S) would include: Select one: O a. A credit to Common Stock with $80,000 O b. A credit to Investment account with $200,000 O c. A debit to Additional paid-in capital with $20,000 O d. A credit to retained earnings with $80,000arrow_forwardOn August 1 2018, Sea Food Co., purchased 80% of the common stock of Dolphin Co.,. The common stock issue 70,000 shares of its (Sea Food) OMR 25 par value. Common stock market price of OMR 30 per share. Calculate the investment of Dolphin Co., Select one: a. 1,750,000 b. 2,100,000 c. 1,400,000 d. 1,680,000arrow_forwardRoland acquires 70% of Felix on January 1, 2011. The terms of purchase are that Roland pays to Felix shareholders 70,000 shares of Roland common stock with a market value of $20 per share. The remaining 30,000 shares of Felix were traded at $15 both just before the acquisition date and right after the acquisition date. a. How much is the control premium per share b. How much is the total control premium paid by Roland c. Calculate business fair value d. Assume that 100% of the fair value of net assets acquired was S1,200,000. How much is goodwill e. How much goodwill is allocated to the controlling interest f. How much goodwill is allocated to the non-controlling interestarrow_forward
- Power Corporation purchased a 70% interest in Star Company on January 1, 2013 for P140,000, when Star’s stockholders’ equity consisted of P30,000 common stock, P100,000 additional paid-in-capital, and P200,000 retained earnings. Income and dividends data for Star are as follows: Net income (or loss) P50,000 Dividends 5,000 NCI is measured at fair value What is the NCI at December 31, 2013? P149,600 P148,000 P73,500 P151,370arrow_forwardOn January 1, 2015, Pub Corporation made a significant acquisition, purchasing 75 percent of SubCorporation's outstanding voting stock for a total of $4,200,000. Sub Corporation's stockholders'equity at that time was made up of the following components (all values in thousands):Capital stock with a par value of $10: $2,000Additional paid-in capital: $1200Retained earnings as of December 31, 2014: $1500Total stockholders' equity: $4700The surplus fair value of the net assets obtained from this acquisition was allocated as follows: 10percent to underappreciated inventory (which was subsequently sold in 2015), 40 percent tounderappreciated plant assets with a remaining useful life of eight years, and the remaining 50 percentto goodwill.Fast forward to December 31, 2019, and we have the comparative trial balances for both PubCorporation and Sub Corporation. Pub SubOther assets—net $5,845 $4500Investment in Sub—75% 3,640 —Expenses (including cost of sales) 5,285 800Dividends 600 300 $15370…arrow_forwardOn January 1, 2015 ,Pub Corporation made a significant acquisition, purchasing 75 percent of SubCorporation's outstanding voting stock for a total of $4,200,000. Sub Corporation's stockholders'equity at that time was made up of the following components (all values in thousands):Capital stock with a par value of $10: $2,000Additional paid-in capital: $1200Retained earnings as of December 31, 2014: $1500Total stockholders' equity: $4700The surplus fair value of the net assets obtained from this acquisition was allocated as follows: 10percent to underappreciated inventory (which was subsequently sold in 2015), 40 percent tounderappreciated plant assets with a remaining useful life of eight years, and the remaining 50 percentto goodwill.Fast forward to December 31, 2019, and we have the comparative trial balances for both PubCorporation and Sub Corporation.…arrow_forward
- AB Inc. acquired 100% stake in CD Inc. on January 1, 2013 by issuing 30,000 shares of common stock. The shares have a fair value of $15 per share. AB also paid $30,000 in stock issuance costs. Just before acquisition, AB had Common stock of $360,000 and Additional paid-in capital of 20,000. CD had Common stock of $80,000 and Additional paid- in capital of $40,000. Assuming both companies continue to operate separately, How much total capital that would appear in the consolidated Balance sheet at January 1, 2013? Select one: O a. $830,000 O b. $380,000 c. $800,000 O d. $950,000arrow_forwardPartner Company acquired 85% of the common stock of Simplex Company in two separate cash transactions. The first purchase of 108,000 shares (60%) on January 1, 2015, cost $735,000. The second purchase, one year later, of 45,000 shares (25%) cost $330,000. Simplex Company’s stockholders’ equity was as follows: December 31 December 31 2015 2016 Common Stock, $5 par $ 900,000 $ 900,000 Retained Earnings, 1/1 263,000 302,000 Net Income 69,000 90,000…arrow_forwardOn January 1, 2015, Pub Corporation made a significant acquisition, purchasing 75 percent of Sub Corporation's outstanding voting stock for a total of $4,200,000. Sub Corporation's stockholders' equity at that time was made up of the following components (all values in thousands): Capital stock with a par value of $10: $2,000 Additional paid-in capital: $1,200 Retained earnings as of December 31, 2014: $1,500 Total stockholders' equity: $4,700 The surplus fair value of the net assets obtained from this acquisition was allocated as follows: 10 percent to underappreciated inventory (which was subsequently sold in 2015), 40 percent to underappreciated plant assets with a remaining useful life of eight years, and the remaining 50 percent to goodwill. Fast forward to December 31, 2019, and we have the comparative trial balances for both Pub Corporation and Sub Corporation. Pub Sub Other assets - net $5,845 $4,500 Investment in Sub - 75% 3,640 - Expenses…arrow_forward
- On January 1, 2015, Pub Corporation made a significant acquisition, purchasing 75 percent of Sub Corporation's outstanding voting stock for a total of $4,200,000. Sub Corporation's stockholders' equity at that time was made up of the following components (all values in thousands): Capital stock with a par value of $10: $2,000 Additional paid-in capital: $1,200 Retained earnings as of December 31, 2014: $1,500 Total stockholders' equity: $4,700 The surplus fair value of the net assets obtained from this acquisition was allocated as follows: 10 percent to underappreciated inventory (which was subsequently sold in 2015), 40 percent to underappreciated plant assets with a remaining useful life of eight years, and the remaining 50 percent to goodwill. Fast forward to December 31, 2019, and we have the comparative trial balances for both Pub Corporation and Sub Corporation. Pub Sub Other assets - net $5,845 $4,500 Investment in Sub - 75% 3,640 - Expenses…arrow_forwardZiegler Corporation purchased 25,000 ordinary shares of Sherman Corporation for P40 per share on January 2, 2015. Sherman Corporation had 100,000 ordinary shares outstanding during 2016, paid cash dividends of P60,000 during 2016, and reported net income of P200,000 for 2016. Ziegler Corporation should report revenue from investment for 2016 in the amount of P15,000 P35,000 P50,000 P55,000arrow_forwardOn January 1, 2015, Pub Corporation made a significant acquisition, purchasing 75 percent of Sub Corporation's outstanding voting stock for a total of $4,200,000. Sub Corporation's stockholders' equity at that time was made up of the following components (all values in thousands): Capital stock with a par value of $10: $2,000 Additional paid-in capital: $1200 Retained earnings as of December 31, 2014: $1500 Total stockholders' equity: $4700 The surplus fair value of the net assets obtained from this acquisition was allocated as follows: 10 percent to underappreciated inventory (which was subsequently sold in 2015), 40 percent to underappreciated plant assets with a remaining useful life of eight years, and the remaining 50 percent to goodwill. Fast forward to December 31, 2019, and we have the comparative trial balances for both Pub Corporation and Sub Corporation. Pub Sub Other assets—net $5,845 $4500 Investment in Sub—75% 3,640 Expenses…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Financial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage Learning
Financial Accounting
Accounting
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Cengage Learning