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 1.2.1C
To determine
Introduction: Acquisition is a corporate term used to represent purchase of another company and gaining the ownership of the company.
To Classify: The type of merger in the given scenario.
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On July 1, 2015, Cleopatra Corporation acquired 25% of the shares of Marcus, Inc. for P1,000,000. At that date, the equity of Marcus was P4,000,000, with all the identifiable assets and liabilities being measured at amounts equal to fair value. The table below shows the profits and losses made by Marcus during 2015 to 2019:
Year
Profit (Loss)
2015
200,000
2016
2,000,000
2017
2,500,000
2018
160,000
2019
300,000
How much will the Investment in Associate account be debited/credited in 2018?
Group of answer choices
No entry
P40,000 Dr.
P1,035,000 Cr.
P1,060,000 Cr.
During the year 2017, Nestle Corp. sold 2,000 shares of Polland Co. for P114,600 and purchased 2,000 more
shares of Lj Inc. and 1,000 shares of Dwarfy Company. On December 31, 2017, Nestle's equity securities
portfolio consisted of the following:
Quantity
1,000 shares
2,000 shares
1,000 shares
2,000 shares
Investment
Cost
Fair value
Lj, Ic.
Lj, Inc.
Dwarfy Company
Alabang Corp.
P45,000
99,000
48,000
216,000
P60,000
120,000
36,000
66,000
Totals
P408,000
P282,000
What is the gain or loss on the sale of Polland Co. investment?
5,400 gain
5,400 loss
11,400 gain
a.
b.
С.
d.
11,400 loss
What is the carrying amount of the investments on December 31, 2017?
408,000
444,000
c. 282,000
d. 246,000
a
b.
What amount of unrealized gain or loss should be reported in the income statement for the year ended December
31, 2017?
P126,000 unrealized gain
P126,000 unrealized loss
a.
b.
P108,000 unrealized gain
d. P108,000 unrealized loss
с.
On June 30, 2014, PC Company purchased all of the common stock of Silicon Company by issuing 100,000 shares of its $1 par value common stock, with a market value of $25/share. PC Company incurred $400,000 in registration and issuing costs, and $250,000 in consulting and legal fees, paid in cash. The book value of Silicon Company at the date of acquisition was $1,000,000, consisting of capital stock of $560,000, retained earnings of $280,000 (credit balance), treasury stock of $35,000, and accumulated other comprehensive income of $195,000 (credit balance). The carrying values of Silicon's reported assets and liabilities approximate fair value, but it has $700,000 in customer lists, not reported on its balance sheet.
PC's journal entry to record this acquisition includes a credit to additional paid in capital?
PC's journal entry to record this acquisition includes a debit to investment in Silicon?
What is the Eliminating entry
Eliminating entry a debit of goodwill are?
What are the…
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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- Partner Company acquired 85% of the common stock of Simplex Company in two separate cash transactions. The first purchase of 108,000 shares (60%) on January 1, 2015, cost $735,000. The second purchase, one year later, of 45,000 shares (25%) cost $330,000. Simplex Company’s stockholders’ equity was as follows: December 31 December 31 2015 2016 Common Stock, $5 par $ 900,000 $ 900,000 Retained Earnings, 1/1 263,000 302,000 Net Income 69,000 90,000…arrow_forwardZiegler Corporation purchased 25,000 ordinary shares of Sherman Corporation for P40 per share on January 2, 2015. Sherman Corporation had 100,000 ordinary shares outstanding during 2016, paid cash dividends of P60,000 during 2016, and reported net income of P200,000 for 2016. Ziegler Corporation should report revenue from investment for 2016 in the amount of P15,000 P35,000 P50,000 P55,000arrow_forwardOn January 1, 2015, Pub Corporation made a significant acquisition, purchasing 75 percent of Sub Corporation's outstanding voting stock for a total of $4,200,000. Sub Corporation's stockholders' equity at that time was made up of the following components (all values in thousands): Capital stock with a par value of $10: $2,000 Additional paid-in capital: $1200 Retained earnings as of December 31, 2014: $1500 Total stockholders' equity: $4700 The surplus fair value of the net assets obtained from this acquisition was allocated as follows: 10 percent to underappreciated inventory (which was subsequently sold in 2015), 40 percent to underappreciated plant assets with a remaining useful life of eight years, and the remaining 50 percent to goodwill. Fast forward to December 31, 2019, and we have the comparative trial balances for both Pub Corporation and Sub Corporation. Pub Sub Other assets—net $5,845 $4500 Investment in Sub—75% 3,640 Expenses…arrow_forward
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