Digery Inc. and Braggety Inc. are two arm’s length corporations who plan to amalgamate. Each corporation has only common shares outstanding. The common shares of Digery have a PUC and ACB of $600 and the company is worth approximately $20,000. Braggety Inc. common shares have a PUC and ACB of $1,200 and the company is worth approximately $80,000. If 200 common shares of the amalgamated company are issued, how many will Braggety’s shareholders receive on amalgamation? What will be the ACB of the shares received by Braggety’s shareholders?
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Digery Inc. and Braggety Inc. are two arm’s length corporations who plan to amalgamate. Each corporation has only common shares outstanding. The common shares of Digery have a PUC and ACB of $600 and the company is worth approximately $20,000. Braggety Inc. common shares have a PUC and ACB of $1,200 and the company is worth approximately $80,000. If 200 common shares of the amalgamated company are issued, how many will Braggety’s shareholders receive on amalgamation? What will be the ACB of the shares received by Braggety’s shareholders?
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- Sloane, Inc., issues 25,000 shares of its own common stock in exchange for all of the outstanding shares of Benjamin Company. Benjamin will remain a separately incorporated operation. How does Sloane record the issuance of these shares?Vanity Corporation owned 50,000 shares of another Lonely Corporation. These 50,000 shares were originally purchased for 100 per share. The investee distributed 50,000 rights to Vanity Corporation. Vanity Corporation was entitled to buy one new share for 140 and five of these rights. Each share had a market value of 150 and each right had market value of 10 on the date of issuance. Vanity Corporation exercised all rights. The share rights are accounted for separately and measured initially at fair value. What total cost should be recorded for the new shares that are acquired by exercising the rights?On January 1, Al-Harbi Corporation pays $400,000 cash and also issues 36,000 shares of $10 par common stock with a market value of $660,000 for all the outstanding common shares of Al- Swailem Corporation. In addition, Al-Harbi pays $60,000 for registering and issuing the 36,000 shares and $140,000 for the other direct costs of the business combination, in which Al-Swailem Corporation is dissolved. Summary balance sheet information for the companies immediately before the merger is as follows: Al-Harbi Al-Swailem Al-Swailem Book Value Book Value Fair Value Cash 700,000 80,000 80,000 Inventories 240,000 160,000 200,000 Other current assets 60,000 40,000 40,000 Plant assets-net 520,000 360,000 560,000 Total assets 1,520,000 640,000 880,000 Current liabilities 320,000 60,000 60,000 Other liabilities 160,000 100,000 80,000 Common stock, $10 840,000 400,000 Retained earnings 200,000 80,000 Total liabilities and owners' equity 1,520,000 640,000 Required: Prepare all journal entries on…
- Mattoon, Inc., owns 80 percent of Effingham Company. For the current year, this combined entity reported consolidated net income of $500,000. Of this amount $465,000 was attributable to Mattoon’s controlling interest while the remaining $35,000 was attributable to the noncontrolling interest. Mattoon has 100,000 shares of common stock outstanding and Effingham has 25,000 shares outstanding.Neither company has issued preferred shares or has any convertible securities outstanding. On the face of the consolidated income statement, how much should be reported as Mattoon’s earnings per share?a. $5.00b. $4.65c. $4.00d. $3.88Susan Casulla, Margie Landicho and Christine Supapo decided to incorporate their business and invited Irene Beltran and Eleanor Eno to join with them. The partnership shall transfer all assets and liabilities to the corporation. Irene Beltran and Eleanor Eno will purchase 250 each of the corporation’s ordinary share. The corporation is authorized to issue 5,000 shares at P50.00 par value per share. The post-closing trial balance after adjustments in preparation for incorporation follows: Yummy Cakes and Pastries Post-closing Trial Balance September 30, 20A Debit Credit Cash 40,000 Merchandise Inventory 70,000 Furniture and Equipment 100,000 Accumulated Depreciation 20,000 Accounts Payable…Individuals A and B are planning to form a new corporation: NEWCO. A will contribute to NEWCO several high-end super computers with a combined, fair market value of 80,000. A's adjusted basis in these computers is 10,000. B will contribute to NEWCO 80,000 of cash. NEWCO will issue to each of A and B, 100 shares of voting common stock in exchange for the property and cash contributed. Consequently, there will be 200 common shares outstanding with a total initial value of $160,000? What is A's basis in her shares of NEWCO, assuming the contributions meet all the requirements of IRC 351? a. A’s basis for her stock is 80,000, same as B. b. A’s basis for her stock is 10,000, i.e., a substituted basis. c. A's basis for her stock is zero because the company has not generated E&P A. A’s basis for her stock is 100, which is equal to the number of shares she received.
- Star Ltd. and Moon Ltd. had been carrying on business independently. They agreed to amalgamate and form a new company Neptune Ltd. with an authorised share capital of $2,00,000 divided into 40,000 equity shares of $5 each. On 31st March, 2016, the respective financial position of Star Ltd. and Moon Ltd. were as follows: Star Ltd. Moon Ltd. $ 3,17,500 1,63,500 $ 1,82,500 83,875 Fixed Assets Current Assets 4,81,000 2,98,500 2,66,375 90,125 Less : Current Liabilities 1,82,500 1,76,250 Representing Capital Additional Information : (a) Revalued figures of Fixed and Current Assets were as follows : Мoon Ltd. $ Star Ltd. $ 3,55,000 1,49,750 1,95,000 78,875 Fixed Assets Current Assets (b) The debtors and creditors include $ 21,675 owed by Star Ltd. to Moon Ltd. The purchase consideration is satisfied by issue of the following shares and debentures: (i) 30,000 equity shares of Neptune Ltd. to Star Ltd. and Moon Ltd. in the proportion to the profitability of their business based on the average…When it purchased Sutton, Inc. on January 1, 20X1, Pavin Corporation issued 500,000 shares of its $5 par voting common stock. On that date the fair value of those shares totaled $4,200,000. Related to the acquisition, Pavin had payments to the attorneys and accountants of $200,000, and stock issuance fees of $100,000. Immediately prior to the purchase, the equity sections of the two firms appeared as follows: Pavin Sutton Common stock $ 4,000,000 $ 700,000 Paid-in capital in excess of par 7,500,000 900,000 Retained earnings 5,500,000 500,000 Total $17,000,000 $2,100,000 Immediately after the purchase, the consolidated balance sheet should report retained earnings of: a. $6,000,000 b. $5,800,000 c. $5,500,000 d. $5,300,000Prior to the merger, Glassons has $1,250 in total earnings with 750 shares outstanding at a market price per share of $42. Country Road has $740 in total earnings with 220 shares outstanding at $18 per share. Assume Glassons acquires Country Road via an exchange of stock at a price of $20 for each share of Country Road's stock. Both Glassons and Country Road have no debt outstanding. What will the earnings per share of Glassons be after the merger?
- Mattoon, Inc., owns 80 percent of Effingham Company. For the current year, this combined entity reported consolidated net income of $946,000. Of this amount, $906,000 was attributable to Mattoon's controlling interest while the remaining $40,000 was attributable to the noncontrolling interest. Mattoon has 151,000 shares of common stock outstanding, and Effingham has 41,500 shares outstanding. Neither company has issued preferred shares or has any convertible securities outstanding. On the face of the consolidated income statement, how much should be reported as Mattoon's earnings per share? Multiple Choice O O $4.87. $6.00. $6.26. $4.91.Rio Tinto Limited has decided to sell its shale coal part of the business by establishing a new limited liability company to be known as Shoal Limited. Shoal Limited will be a listed corporation on the ASX. Rio Tinto and Shoal decide to issue the new shares at $2.65. (i) Shoal Limited will be a limited liability company. What are the rights and financial obligations of shareholders that purchase shares in the company? ii) One year later, Shoal Limited plans to expand its operations and seek to raise capital to do so. The company advisers recommend that the board of directors choose between a private placement or initial public offering. Explain each of these funding alternatives and discuss the advantages and disadvantages of each alternative.The two companies agreed to amalgamate to form a new company called Z Ltd. The authorized capital of Z Ltd is 100,000 equity shares of $10 each. The assets of X Ltd are taken over at a reduced valuation of 10% with the exemption of land and building which are accepted at bookvalue. Both the companies to receive 5% of the valuation of their respective. Business as goodwill. The entire purchase price is to be paid by Z ltd in fully paid shares.in return for debentures in X Ltd. Debentures of the same amount and denomination are to be issued by Z ltd. Calculate the purchase consideration.