Advanced Accounting
12th Edition
ISBN: 9781305084858
Author: Paul M. Fischer, William J. Tayler, Rita H. Cheng
Publisher: Cengage Learning
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Textbook Question
Chapter 1, Problem 1.1AC
(Note: The use 01 a financial calculator or Excel is suggested for this case.)
Modern Company acquires the net assets of Frontier Company for $1,300,000 on January 11, 2015. A business valuation consultant arrives at the price and deems it to be a good value.
Part A. The following list of fair values is provided to you by the consultant:
Using the information in the preceding table, contra the accuracy of the present value cal Required collations mode for the building, patent, and mortgage payable.
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Prior to finishing the final offer, Simpson's M&A team has a discussion with NPV Advisory. You were asked to provide a combined valuation for the new company based on the information below.
?
Table 1. Simpsons
2017A
2018A
2019F
stores local
Sales (2 locations)
6.00
10.00
17.00
Operating Costs
Operating Income
-4.20
-6.60
-11.50
1.80
3.40
5.50
Depreciation and
Amortization
1.00
1.20
1.50
EBITDA
?
Net debt of the
20.00
company
?
Table 2. RaTrade
2017A
2018A
2019F
Sales (20 locations)
120.00
134.00
145.00
Operating Costs
-90.00
-104.50
-111.70
Operating Income
30.00
29.50
33.30
Depreciation and
5.00
4.50
6.00
amortization
EBITDA
?
Net debt of the
56.00
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1) What is the expected valuation of the Combined Company based on EBITDA ignoring all the discounts and premiums?
2) If the offer price by the Simpsons was $165M for 100% of equity, what is the upside for the buyer in dollars and as a percentage, if the new company will be valued at an international EV/EBITDA ratio of 6?
PROBLEM 4:
You are the senior auditor in charge for the annual audit of Samal Corp. for the year ended December
31, 2020. You checked mostly the information in the financial records for this small/medium entity and
was highly satisfied.
You noticed however, that the property account consisted of land which was acquired on January 1,
2018 together with eight identical buildings equally built on it. The initial purchase price was
P48,000,000, thirty percent of which is attributable to the land. The eight buildings were estimated to
have a 50 years as economic lives of which two of them were used for general and administrative
offices while the rest were leased out to independent parties under operating lease arrangements.
The following costs were also incurred during acquisition:
Non-refundable transfer taxes paid to government
3,000,000
Title insurance and legal fees attributable to the acquisition
1,000,000
Actual borrowing costs
220,000
Marketing and advertisements
100,000
Office…
Can you please help me understand how to solve problems like this one by giving a detailed solution? Would appreciate your help so much. Thank you!
PROBLEM:
The following data were taken from the statement of affairs of ROBINSONS Corp.:
Assets pledged for fully secured liabilities (current fairvalue, $75,000)
$90,000
Assets pledged for partially secured liabilities (currentfair value $52,000)
$74,000
Free assets (current fair value, $40,000)
$70,000
Unsecured liabilities with priority
$7,000
Fully secured liabilities
$30,000
Partially secured liabilities
$60,000
Unsecured liabilities without priority
$112,000
*The amount that will be paid to creditors with priority is:a. 7,000 b. 6,000 c. 7,500 d. 6,200*The amount to be paid fully secured creditors is:a. 30,000 b. 32,000 c. 20,000 d. 35,000*The amount to be paid to partially secured creditors is:a. 52,700 b. 57,200 c. 56,200 d. 57,000*The amount to be paid to unsecured creditors:a. 78,200 b. 70,800 c. 72,000 d.…
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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