Advanced Accounting
12th Edition
ISBN: 9781305084858
Author: Paul M. Fischer, William J. Tayler, Rita H. Cheng
Publisher: Cengage Learning
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Chapter 1, Problem 1.13.2P
To determine
Introduction: Acquisition is a corporate term used to represent purchase of another company and gaining the ownership of the company.
To Prepare:
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On January 1, 2020 Chicken Wings Company purchased P3,000,000, 8% bonds of Fried Chicken Corporation for an amount that yields 10%. Interest is payable every June 30 and December 31 of the year. The bonds will mature on December 31, 2024. The business model of the entity is to collect the contractual cash flows which represent sole payment of principal and interest. On April 1, 2022, to pay maturing obligations, Chicken Wings Company sold P1,000,000 face value bonds for total proceeds of 104. Additionally, Fried Chicken Corporation is currently financially distressed and after paying the amount due on December 31, 2022 was unable to meet the original terms of the contract. Fried Chicken Corporation arrange for negotiation by lowering the interest rate from 8% to 4% for the remaining terms.How much is the total (net) impact in the profit or loss of the bond transactions for the year 2022?
Marcus Company made the following transactions in the ordinary shares
of Cato Company designated as a financial asset at fair value through
profit or loss:
July 16, 2018- Purchased 10,000 shares at P45 per share.
nces
June 28, 2019 - Sold 2,000 shares for P51 per share.
ations
May 18, 2020 - Sold 2,500 shares for P33 per share.
The end-of-year market prices for the shares were as follows:
December 31, 2018 - P47 per share
December 31, 2019 P39 per share
December 31, 2020 P31 per share
1. How much should be recognized in 2020 profit or loss as a result of the
fair value changes? (use negative sign if your answer is a loss)
2. How much should be recognized as realized gain on sale for the year
ended December 31, 2020? (use negative sign if your answer is a loss)
1
2)
On January 1, 202X, Dianne Corporation acquired the net assets of Cyril Corporation by issuing 60,000 shares with par and market values of P20 and P2,300,000, respectively. Moreover, it agreed to pay an additional P170,000 on January 1, 202Z if the average income in 202X and 202Y exceeds P150,000 per year. The expected value of the additional payment is estimated at P102,000 based on the 60% probability of achieving the target average income. The carrying and fair values of Cyril Corporation’s identifiable net assets as of the acquisition date are P2,200,000 and P2,000,000, respectively.
Required:
Determine the amount of goodwill or gain on bargain purchase from the above transaction.
Give the adjusting entry assuming that the company determined on September 30, 202X that there is an 80% probability that the estimated average income will be achieved.
Give the adjusting entry assuming that the company determined on March 31, 202Y that there is a 90% probability that the estimated…
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...
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