Advanced Financial Accounting
12th Edition
ISBN: 9781259916977
Author: Christensen, Theodore E., COTTRELL, David M., Budd, Cassy
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Question
Chapter 1, Problem 1.8E
To determine
Concept Introduction: Consolidation is the process of accounting where books of parent company are reported along with the books of the subsidiary company in consolidated/combined form after making necessary
To Explain:
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
arizona corp. acquired the business data systems for $320,000 cash and assumed all liabilites at the data of purchase. data's books showed tangible assets of $340,000, liabilities of $19,000, and stockholders' equity of $321,000. an appraiser assessed the fair market value of the tangible assets at $310,000 at the data of acquisition.
a. compute the amount of goodwill acquired.
b. record the acquisition in a financial statements model. Arizona corps. financial condition just prior to the aquistion is shown in the following statements model.
cash paid-
liabilites assumed-
total-
FMV of assets-
goodwill-
Arizona Corporation acquired the business Data Systems for $320,000 cash and assumed all liabilities at the date of purchase. Data's
books showed tangible assets of $260,000, liabilities of $40,000, and stockholders' equity of $220,000. An appraiser assessed the
fair market value of the tangible assets at $250,000 at the date of acquisition. Arizona Corporation's financial condition just prior to the
acquisition is shown in the following statements model.
Required
a. Compute the amount of goodwill acquired.
b. Record the acquisition in a financial statements model like the preceding one.
Complete this question by entering your answers in the tabs below.
Required A Required B
Record the acquisition in a financial statements model.
Note: In the Statement of Cash Flows column, use the initials OA for operating activities, FA for financing activities, or IA for investing activity. Enter any cash outflows or decreases to account balances
with a minus sign. Leave cells blank if no input is…
Arizona Corp. acquired the business Data Systems for $320,000 cash and assumed all liabilities at the date of purchase. Data's books showed tangible assets of $260,000, liabilities of $40,000, and stockholder's equity of $220,000. An appraiser assessed the fair market value of the tangible assets at $250,000 at the date of acquisition.
Compute the amount of good will acquired
Record the qcquisition in a financial statements model
When will teh goodwill be written off under the impairment rules
Record the acquisition in general journal format
Chapter 1 Solutions
Advanced Financial Accounting
Ch. 1 - What types of circumstances would encourage...Ch. 1 - How would the decision to dispose of a segment of...Ch. 1 - Prob. 1.3QCh. 1 - Prob. 1.4QCh. 1 - Prob. 1.5QCh. 1 - Prob. 1.6QCh. 1 - Prob. 1.7QCh. 1 - Prob. 1.8QCh. 1 - Prob. 1.9QCh. 1 - Prob. 1.10Q
Ch. 1 - Prob. 1.11QCh. 1 - Prob. 1.12QCh. 1 - Prob. 1.13QCh. 1 - Prob. 1.14QCh. 1 - Within the measurement period following a business...Ch. 1 - Prob. 1.16QCh. 1 - Prob. 1.1CCh. 1 - Prob. 1.2CCh. 1 - Prob. 1.3CCh. 1 - Prob. 1.4CCh. 1 - Risks Associated with Acquisitions Not all...Ch. 1 - Prob. 1.6CCh. 1 - Prob. 1.1.1ECh. 1 - Prob. 1.1.2ECh. 1 - Prob. 1.1.3ECh. 1 - Multiple-Choice Questions on Complex Organizations...Ch. 1 - Prob. 1.1.5ECh. 1 - Prob. 1.2.1ECh. 1 - Prob. 1.2.2ECh. 1 - Multiple-Choice Questions on Recording Business...Ch. 1 - Prob. 1.2.4ECh. 1 - Multiple-Choice Questions on Recording Business...Ch. 1 - Multiple-Choice Questions on Reported Balances...Ch. 1 - Multiple-Choice Questions on Reported Balances...Ch. 1 - Prob. 1.3.3ECh. 1 - Prob. 1.3.4ECh. 1 - Prob. 1.4.1ECh. 1 - Prob. 1.4.2ECh. 1 - Prob. 1.4.3ECh. 1 - Multiple-Choice Questions Involving Account...Ch. 1 - Prob. 1.4.5ECh. 1 - Prob. 1.5ECh. 1 - Prob. 1.6ECh. 1 - Prob. 1.7ECh. 1 - Prob. 1.8ECh. 1 - Prob. 1.9ECh. 1 - Prob. 1.10ECh. 1 - Balances Reported Following Combination Palm...Ch. 1 - Goodwill Recognition Spur Corporation reported the...Ch. 1 - Acquisition Using Debentures Planter Corporation...Ch. 1 - Bargain Purchase Using the data resented in E1-13,...Ch. 1 - Prob. 1.15ECh. 1 - Prob. 1.16ECh. 1 - Prob. 1.17ECh. 1 - Prob. 1.18ECh. 1 - Prob. 1.19ECh. 1 - Prob. 1.20ECh. 1 - Prob. 1.21ECh. 1 - Prob. 1.22ECh. 1 - Prob. 1.23ECh. 1 - Prob. 1.24PCh. 1 - Prob. 1.25PCh. 1 - Prob. 1.26PCh. 1 - Acquisition in Multiple Steps Peal Corporation...Ch. 1 - Prob. 1.28PCh. 1 - Prob. 1.29PCh. 1 - Prob. 1.30PCh. 1 - Prob. 1.31PCh. 1 - Computation of Account Balances Saspro Division is...Ch. 1 - Prob. 1.33PCh. 1 - Prob. 1.34PCh. 1 - Prob. 1.35PCh. 1 - Business Combination Following are the balance...Ch. 1 - Prob. 1.37PCh. 1 - Prob. 1.38PCh. 1 - Prob. 1.39PCh. 1 - Prob. 1.40P
Knowledge Booster
Similar questions
- Hoover Company acquired Burgess Company for $1,200,000 cash. The fair value of Burgess's assets was $1,040,000, and the company had liabilities of $60,000. Which of the following journal entries would be used to record the purchase of Burgess Company? Multiple Choice Burgess assets Burgess liabilities Goodwill Cash Burgess assets Cash 1,040,000 60,000 100,000 1,200,000 1,200,000 1,200,000arrow_forwardMainline Produce Corporation acquired all the outstanding common stock of Iceberg Lettuce Corporation for $30,000,000 in cash. The book values and fair values of Iceberg's assets and liabilities were as follows: Current assets Property, plant, and equipment Other assets Current liabilities Long-term liabilities Required: 1. Calculate the amount paid for goodwill. 2. Determine the financial statement effects of the acquisition. Required 1 Required 2 Complete this question by entering your answers in the tabs below. Book Value $ 11,400,000 20,200,000 3,400,000 7,800,000 13,200,000 Assets Determine the financial statement effects of the acquisition. Note: Amounts to be deducted should be indicated with a minus sign. Enter your answer in millions rounded to 1 decimal place. (i.e. 5,500,000 should be entered as 5.5). Accounts Payable Accounts Receivable Accumulated Depreciation Advertising Expense Fair Value $ 14,400,000 26,200,000 4,400,000 7,800,000 12,200,000 Balance Sheet Liabilities…arrow_forwardPhoenix Corporation acquired the business Sun Systems for $315,000 cash and assumed all liabilities at the date of purchase. Sun’s books showed tangible assets of $330,000, liabilities of $18,000, and stockholders’ equity of $312,000. An appraiser assessed the fair market value of the tangible assets at $305,000 and liabilities at $18,000 at the date of acquisition. Phoenix Corporation’s financial condition just prior to the acquisition is shown in the following statements model. Required 1 Compute the amount of goodwill acquired. 2 Record the acquisition in general journal format.arrow_forward
- Arizona Corporation acquired the business Data Systems for $310,000 cash and assumed all liabilities at the date of purchase. Data's books showed tangible assets of $320,000, liabilities of $17,000, and stockholders' equity of $303,000. An appraiser assessed the fair market value of the tangible assets at $300,000 and liabilities at $17,000 at the date of acquisition. Arizona Corporation's financial condition just prior to the acquisition is shown in the following statements model. Balance Income Sheet Statement Assets Cash = + Liabilities + Tangible Assets ΝΑ + Stockholders Equity Goodwill Revenue Expenses = + ΝΑ = ΝΑ + Net Income 520,000 + Required 1.Compute the amount of goodwill acquired. 2.Record the acquisition in a financial statements model. Arizona Corporation's financial condition just prior to the acquisition is shown in the financial statements model. 3.Record the acquisition in general journal format. 520,000 NA Statement of Cash Flows ΝΑ = ΝΑ ΝΑarrow_forwardOn January 1, Year 1, East Company purchased West Company. East Company paid $670,000 cash and assumed all of West Company's liabilities. West's books showed tangible assets of $578,000, liabilities of $54,000, and equity of $632,000. An appraiser assessed the fair market value of the tangible assets at $622,000 at the date of acquisition. On December 31, Year 4 East determines that the goodwill suffered a $32,000 permanent impairment. However, on December 31, Year 6 East estimated that it had recovered $12,000 of the impairment that had previously been considered to be permanent impairment. Based on this information, the book value of the goodwill shown on the December 31, Year 6 balance sheet is: Multiple Choice O O O $102,000. $134,000. $54,000. $70,000.arrow_forwardParma Ltd purchased a parcel of assets and liabilities comprising a business directly from Pauls Pty Ltd. The parcel, measured at net fair values, consisted of: Balance of Accounts: Plant 250,000 Land 340,000 Vehicles 320,000 Accounts receivable 130,000 Accounts payable (148,000)Total 892,000 Required: Prepare journal entries to record the acquisition by Parma Ltd, if the cost of acquisition was $1,100,000 cash.arrow_forward
- Show the solution in good accounting form Coronation company purchased an entity for 6,000,000 cash on January 31. The book value and fair value of the assets of the acquired entity as of the date of acquisition of follow: Question: What is the good arising from the acquisition? A. 4,450,000 B. 700,000 C. 2,450,000 D. 2,700,000arrow_forwardPutin Company acquired the assets and assumed the liabilities of Joni Company on January 1, 2018, paying OMR 4,500,000 cash. Immediately prior to the acquisition, Joni Company's balance sheet was as follows: BOOK VALUE FAIR VALUE Accounts receivable 240,000 220,000 Inventory 290,000 320,000 Land 960,000 1,508,000 Buildings 1,020,000 1,392,000 Total 2,510,000 3,440,000 Accounts payable 270,000 270,000 Note payable 600,000 600,000 Common stock, $5 par 420,000 Other contributed capital…arrow_forwardOn September 1, 2018, Vernon Corporation acquired Barlow Enterprises for a cash payment of $820.000. At the time of purchases. Barlow's balance sheet showed assets of $610.000. liabilities of $240.000, and owner's equity of $420.000. The fair value of Barlow's assets is estimated to be 5970.000.The liabilities are all estimated to be at fair value. a) Compute the amount of goodwill acquired by Vernon. 120000 b) On December 31, 2020, the fair value of Barlow as a reporting unit is estimated to be $720.000. The carrying value of Vernon's investment in Barlow at year-end is $750.000. The fair value of Barlow's identifiable net asset, excluding the goodwill, is determined to be 655.000 Prepare Vernon's journal entry, if necessary, to record impairment of goodwill. Please use the new standard (Hint: The FASB's new goodwill Impairment testing guidance- ASU 2017-04 is required for public SEC filers for periods beginning after December 15. 2019) Note: Please use integer only. Do not use a S.…arrow_forward
- 1. One Corporation concluded that the fair value of Two Company was P160,000 and paid that amount to acquire all of its net assets. Two reported assets with a book value of P120,000 and a fair value of 196,000 and liabilities with a book value and fair value of P46,000 on the date of combination. One also paid P6,000 to a search firm for finder’s fees related to acquisition. What amount will be recorded as goodwill by One Corporation? 26,000 10,000 16,000 0 2. On April 1, 2019, Won Corp. paid cash of P1,240,000 for all the net assets of Shein Company appropriately accounted for as a merger. The recorded assets and liabilities of Shein Company on April 5, 2019 follow: 300,000 420,000 100,000 0 3. On January 1 2021,NOP acquires 100% interest in QRS in exchange for NOP’s 10,000 shares with par value per share of P20 and fair value per share of P200. QRS’s net identifiable assets have fair value of P1,920,000 and a book value of P1,850,000. In addition, NOP agrees to provide an…arrow_forwardPuncho 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.arrow_forwardMary Limited acquired the identifiable assets and liabilities of Joan Limited. The items acquired are: equipment $296 000; inventories $160 000; accounts receivable $90 000 (fair value $104 000); patents $60 000; accounts payable $80 000. The net assets were acquired for consideration of $530 000. The difference on acquisition is: a. Goodwill of $10 000 b. Goodwill of $170 000 c. Gain on bargain purchase of $10 000 d. Gain on bargain purchase of $156 000 e. Goodwill of $4 000arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Auditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage Learning
Auditing: A Risk Based-Approach (MindTap Course L...
Accounting
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Cengage Learning