Fundamentals of Advanced Accounting
6th Edition
ISBN: 9780077862237
Author: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Question
Chapter 2, Problem 23P
a.
To determine
Prepare Company Z’s
b.
To determine
Prepare Company Z’s journal entries to record the Company S’s acquisition assuming its initial cash payment to the former owners was $800,000.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
On May 1, Soriano Co. reported the following account balances along with their estimated fair values:
Receivables
Inventory
Copyrights
Patented technology
Total assets
Current liabilities
Long-term liabilities
Common stock
Retained earnings
Total liabilities and equities
$
$
$
Carrying
Amount
90,000 $
75,000
Fair Value
90,000
75,000
125,000
480,000
825,000
700,000
1,115,000 $ 1,345,000
160,000 $ 160,000
645,000
635,000
100,000
210,000
$ 1,115,000
On that day, Zambrano paid cash to acquire all of the assets and liabilities of Soriano, which will cease to exist as a separate entity. To
facilitate the merger, Zambrano also paid $100,000 to an Investment banking firm.
The following Information was also available:
• Zambrano further agreed to pay an extra $70,000 to the former owners of Soriano only if they meet certain revenue goals during
the next two years. Zambrano estimated the present value of its probability adjusted expected payment for this contingency at
$35,000.
• Soriano has a…
On May 1, Soriano Co. reported the following account balances along with their estimated fair values:
Carrying Amount
Fair Value
Receivables
$
221,500
$
221,500
Inventory
81,000
81,000
Copyrights
131,500
496,500
Patented technology
834,000
610,000
Total assets
$
1,268,000
$
1,409,000
Current liabilities
$
186,000
$
186,000
Long-term liabilities
714,000
704,000
Common stock
100,000
Retained earnings
268,000
Total liabilities and equities
$
1,268,000
On that day, Zambrano paid cash to acquire all of the assets and liabilities of Soriano, which will cease to exist as a separate entity. To facilitate the merger, Zambrano also paid $148,500 to an investment banking firm.
The following information was also available:
Zambrano further agreed to pay an extra $73,000 to the former owners of Soriano only if they meet certain revenue goals during the…
On June 1, Cline Co. paid $870,000 cash for all of the issued and outstanding common stock of Renn Corp. The carrying amounts for Renn’s assets and liabilities on June 1 follow:
Cash
$
239,000
Accounts receivable
181,000
Capitalized software costs
340,000
Goodwill
103,000
Liabilities
(226,000
)
Net assets
$
637,000
On June 1, Renn’s accounts receivable had a fair value of $136,000. Additionally, Renn’s in-process research and development was estimated to have a fair value of $253,000. All other items were stated at their fair values. On Cline’s June 1 consolidated balance sheet, how much is reported for goodwill?
Multiple Choice
$340,000.
$20,000.
$128,000.
$83,000.
Chapter 2 Solutions
Fundamentals of Advanced Accounting
Ch. 2 - Prob. 1QCh. 2 - Prob. 2QCh. 2 - What does the term consolidated financial...Ch. 2 - Within the consolidation process, what is the...Ch. 2 - Prob. 5QCh. 2 - Prob. 6QCh. 2 - Prob. 7QCh. 2 - Prob. 8QCh. 2 - Prob. 9QCh. 2 - Prob. 10Q
Ch. 2 - Prob. 11QCh. 2 - Which of the following does not represent a...Ch. 2 - Prob. 2PCh. 2 - Prob. 3PCh. 2 - Prob. 4PCh. 2 - Prob. 5PCh. 2 - An acquired entity has a long-term operating lease...Ch. 2 - When does gain recognition accompany a business...Ch. 2 - Prob. 8PCh. 2 - Prob. 9PCh. 2 - Prob. 10PCh. 2 - On June 1, Cline Co. paid 800,000 cash for all of...Ch. 2 - On May 1, Donovan Company reported the following...Ch. 2 - Prob. 13PCh. 2 - Prob. 14PCh. 2 - Prob. 15PCh. 2 - Prob. 16PCh. 2 - On its acquisition-date consolidated balance...Ch. 2 - On its acquisition-date consolidated balance...Ch. 2 - Prob. 19PCh. 2 - The following book and fair values were available...Ch. 2 - Prob. 21PCh. 2 - Prob. 22PCh. 2 - Prob. 23PCh. 2 - Prob. 24PCh. 2 - Prob. 25PCh. 2 - Prob. 26PCh. 2 - Prob. 27PCh. 2 - Prob. 28PCh. 2 - Prob. 29PCh. 2 - SafeData Corporation has the following account...Ch. 2 - Prob. 31PCh. 2 - Prob. 32PCh. 2 - Prob. 33APCh. 2 - On February 1, Piscina Corporation completed a...Ch. 2 - Prob. 1DYSCh. 2 - Prob. 2DYSCh. 2 - Prob. 3DYS
Knowledge Booster
Similar questions
- On May 1, Soriano Co. reported the following account balances along with their estimated fair values: Carrying Amount Fair Value Receivables $ 188,400 $ 188,400 Inventory 76,600 76,600 Copyrights 146,000 522,000 Patented technology 864,000 646,000 Total assets $ 1,275,000 $ 1,433,000 Current liabilities $ 182,000 $ 182,000 Long-term liabilities 700,000 682,000 Common stock 100,000 Retained earnings 293,000 Total liabilities and equities $ 1,275,000 On that day, Zambrano paid cash to acquire all of the assets and liabilities of Soriano, which will cease to exist as a separate entity. To facilitate the merger, Zambrano also paid $123,000 to an investment banking firm. The following information was also available: Zambrano further agreed to pay an extra $74,000 to the former owners of Soriano only if they meet certain revenue goals during the…arrow_forwardOn May 1, Soriano Company reported the following account balances along with their estimated fair values: Fair Value Carrying Amount $ 196,000 85,000 171,000 874,000 Receivables Inventory Copyrights Patented technology Total assets Current liabilities Long-term liabilities Common stock Retained earnings Total liabilities and equities Items View transaction list $ 1,326,000 $216,000 742,000 100,000 268,000 $ 1,326,000 4 On that day, Zambrano paid cash to acquire all of the assets and liabilities of Soriano, which will cease to exist as a separate entity. To facilitate the merger, Zambrano also paid $125,500 to an investment banking firm. The following information was also available: . Zambrano further agreed to pay an extra $78,200 to the former owners of Soriano only if they meet certain revenue goals during the next two years. Zambrano estimated the present value of its probability adjusted expected payment for this contingency at $39.100. • Soriano has a research and development…arrow_forwardCarmela Company, as of December 31, 2021 provided the following balances: Cash, net of a P7,000 overdraft 80,000 Receivable, net of customer credit balances totaling P6,000 30,000 Inventory (P20,000 of which are held on consignment) 60,000 Prepayments 10,000 Property, plant and equipment, net of accumulated depreciation of P15,000 90,000 Accounts payable net of debit balances in suppliers’ accounts of P3,000 45,000 Notes payable – bank, due on July 2022 25,000 Income tax payable 15,000 Total current assets reported in the December 31, 2021 balance sheet isarrow_forward
- ABC Company, as of December 31, 2021 provided the following balances: Cash, net of a P7,000 overdraft 80,000 Receivable, net of customer credit balances totaling P6,000 30,000 Inventory (P20,000 of which are held on consignment 60,000 Prepayments 10,000 Property, plant and equipment, net of accumulated depreciation of P15,000 90,000 Accounts payable net of debit balances in suppliers' accounts of P3,000 45,000 Notes payable – bank, due on July 2022 25,000 Income tax payable 15,000 17. Total current assets reported in the December 31, 2021 balance sheet is a. 176,000 b. 156,000 c. 173,000 d. 170,000arrow_forwardFollowing are preacquisition financial balances for Padre Company and Sol Company as of December 31. Also included are fair values for Sol Company accounts. PadreCompany Sol Company Book Values Book Values Fair Values 12/31 12/31 12/31 Cash $ 159,000 $ 45,550 $ 45,550 Receivables 277,500 380,000 380,000 Inventory 437,500 289,000 348,200 Land 700,000 213,000 188,500 Building and equipment (net) 752,500 274,000 336,700 Franchise agreements 311,000 273,000 304,800 Accounts payable (352,000 ) (179,000 ) (179,000 ) Accrued expenses (109,000 ) (42,250 ) (42,250 ) Longterm liabilities (932,500 ) (640,000 ) (640,000 ) Common stock—$20 par value (660,000 ) Common stock—$5 par value (210,000 ) Additional paid–in…arrow_forwardFollowing are preacquisition financial balances for Padre Company and Sol Company as of December 31. Also included are fair values for Sol Company accounts. Cash Padre Company Book Values 12/31 $ 193,250 Sol Company Book Values 12/31 $ 72,900 Fair Values 12/31 $ 72,900 Items Receivables 228,000 369,000 369,000 Inventory 602,500 190,000 242,200 Land 765,000 195,000 166,200 Building and equipment (net) 765,000 271,000 340,000 Franchise agreements 224,000 216,000 249,900 Accounts payable (350,000) (138,000) (138,000) Accrued expenses (119,000) (47,500) (47,500) Long-term liabilities Common stock-$5 par value Additional paid-in capital Retained earnings, 1/1 Revenues (995,000) (552,500) (552,500) Common stock-$20 par value (660,000) 0 0 0 (210,000) (70,000) (90,000) 0 0 Expenses (522,500) (1,041,250) 980,000 (251,000) 0 (352,900) 0 328,000 0 Note: Parentheses indicate a credit balance. On December 31, Padre acquires Sol's outstanding stock by paying $108,000 in cash and issuing 17,000…arrow_forward
- Following are preacquisition financial balances for Padre Company and Sol Company as of December 31. Also included are fair values for Sol Company accounts. PadreCompany Sol Company Book Values Book Values Fair Values 12/31 12/31 12/31 Cash $ 159,000 45,550 $ 45,550 Receivables 277,500 380,000 380,000 Inventory 437,500 289,000 348,200 Land 700,000 213,000 188,500 Building and equipment (net) 752,500 274,000 336,700 Franchise agreements 311,000 273,000 304,800 Accounts payable (352,000 ) (179,000 ) (179,000 ) Accrued expenses (109,000 ) (42,250 ) (42,250 ) Longterm liabilities (932,500 ) (640,000 ) (640,000 ) Common stock—$20 par value (660,000 ) Common stock—$5 par value (210,000 ) Additional paid–in capital (70,000 ) (90,000 ) Retained earnings, 1/1 (455,000 ) (288,000 ) Revenues (1,049,000 ) (359,300 ) Expenses 990,000…arrow_forwardThe following are selected account balances from Penske Company and Stanza Corporation as of December 31, 2024: Revenues Accounts Cost of goods sold Depreciation expense Investment income Dividends declared Retained earnings, 1/1/24 Current assets Copyrights Royalty agreements Penske $ (812,000) 289,200 223,000 Not given 80,000 (708,000) 448,000. 978,000 626,000 Stanza $ (680,000) 170,000 204,000 0 60,000 (270,000) 632,000 378,500 Investment in Stanza Liabilities Common stock Additional paid-in capital 1,048,000 Not given (506,000) 0 (1,262,500) (600,000) ($20 par) (150,000) (200,000) ($10 par) (80,000) Note: Parentheses indicate a credit balance. On January 1, 2024, Penske acquired all of Stanza's outstanding stock for $762,000 fair value in cash and common stock. Penske also paid $10,000 in stock issuance costs. At the date of acquisition, copyrights (with a six-year remaining life) have a $466,000 book value but a fair value of $622,000. Required: a. As of December 31, 2024, what is…arrow_forwardFollowing are preacquisition financial balances for Padre Company and Sol Company as of December 31. Also included are fair values for Sol Company accounts. PadreCompany Sol Company Book Values Book Values Fair Values 12/31 12/31 12/31 Cash $ 400,000 $ 120,000 $ 120,000 Receivables 220,000 300,000 300,000 Inventory 410,000 210,000 260,000 Land 600,000 130,000 110,000 Building and equipment (net) 600,000 270,000 330,000 Franchise agreements 220,000 190,000 220,000 Accounts payable (300,000) (120,000) (120,000) Accrued expenses (90,000) (30,000) (30,000) Long-term liabilities (900,000) (510,000) (510,000) Common stock—$20 par value (660,000) Common stock—$5 par value (210,000) Additional…arrow_forward
- The net income reported on the income statement for the current year was $282,126. Depreciation recorded on fixed assets and amortization of patents for the year were $33,351, and $9,402, respectively. Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows: End Beginning Cash $37,370 $64,930 Accounts receivable 106,715 123,079 Inventories 80,207 102,432 Prepaid expenses 8,982 4,271 Accounts payable (merchandise creditors) 77,139 54,111 What is the amount of cash flows from operating activities reported on the statement of cash flows prepared by the indirect method? Select the correct answer. $303,001 $363,468 $381,785 $306,304arrow_forwardFollowing are preacquisition financial balances for Padre Company and Sol Company as of December 31. Also included are fair values for Sol Company accounts. PadreCompany Sol Company Book Values Book Values Fair Values 12/31 12/31 12/31 Cash $ 400,000 $ 120,000 $ 120,000 Receivables 220,000 300,000 300,000 Inventory 410,000 210,000 260,000 Land 600,000 130,000 110,000 Building and equipment (net) 600,000 270,000 330,000 Franchise agreements 220,000 190,000 220,000 Accounts payable (300,000) (120,000) (120,000) Accrued expenses (90,000) (30,000) (30,000) Long-term liabilities (900,000) (510,000) (510,000) Common stock—$20 par value (660,000) Common stock—$5 par value (210,000) Additional…arrow_forwardThe net income reported on the income statement for the current year was $281,847. Depreciation recorded on fixed assets and amortization of patents for the year were $32,101 and $10,127, respectively. Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows: End Beginning Cash $37,628 $62,683 Accounts Receivable 120,761 105,004 Inventories 105,470 86,078 Prepaid Expenses 4,242 8,185 Accounts Payable (merchandise creditors) 47,812 74,478 What is the amount of the net cash flows from operating activities reported on the statement of cash flows prepared by the indirect method? a.$351,049 b.$288,926 c.$266,203 d.$255,489arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education