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 2E
To determine
Introduction: Acquisition is a corporate term used to represent purchase of another company and gaining the ownership of the company.
To provide:
Acquisition entry
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On July 1, 2019, GAR Company acquired 800,000 shares of FAR Company at a price of P13 per share. GAR estimated that the price paid include P1.50 premium in order to gain control over FAR Company. On this date, the fair values of FAR Company’s identifiable assets and liabilities and their carrying values are given below: Book Value Fair ValueCurrent assets P2,000,000 P2,000,000Property, plant and equipment 9,000,000 11,000,000Liabilities P3,000,000 Ordinary shares, P5 par 5,000,000 Retained earnings 3,000,000 Determine the amount of goodwill assuming the non-controlling interest is measured at the proportionate share in the net assets:
Smith Company is acquired by Roan Corporation on July 1, 2015. Roan exchanges 60,000 shares of its $1 par stock, with a fair valueof $18 per share, for the net assets of Smith Company.Roan incurs the following costs as a result of this transaction:Acquisition costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $25,000Stock registration and issuance costs. . . . . . . . . . . . . . . 10,000Total costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $35,000The balance sheet of Smyth Company, on the day of the acquisition, is in the attachment:
The appraised fair values as of July 1, 2015, is as follows:Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $270,000Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220,000Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180,000Buildings . .…
On January 1, 2016, Irbid Corporation acquired 90% of Jerash Company's voting stock, at
underlying book value. At that date, the fair value of Jerash's net asset was equal to book value.
Irbid uses the equity method in accounting for its ownership of Jerash. On December 31, 2016,
the trial balances of the two companies are as follows:
Irbid Corp.
Debit
$ 225,500
300,000
144,000
30,000
180,000
40,000
Jerash Comp.
Debit
$145,000
225,000
Credit
Credit
Current assets
Fixed assets
Investment in Jerash co.
Depreciation expense
Other expense
Dividend
25,000
85,000
10,000
Accumulated depreciation
Current liabilities
Long-term debt
Capital stock
Retained earnings
sales
Income from subsidiary
Total
$150,000
45,000
75,000
100,000
282,500
253,500
13,500
$919,500
$100,000
20,000
90,000
75,000
80,000
125,000
$919,500
| $490,000
$490,000
Required:
1. Provide all eliminating entries needed for consolidation as of December 31, 2016.
2. Prepare a consolidation workpaper for Irbid and Jerash co. as of…
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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