.Platek Enterprises purchases 100 percent of Smith Company for P600,000. At that date Smith Company had the following book value and market values: Accounts Book value Market value Cash and receivables P25,000 P25,000 Inventory 125,000 180,000 Plant assets (net) 300,000 475,000 Current liabilities (60,000) (60,000) Long-term debt (120,000) (120,000) Common stock (15,000) Retained earnings (255,000) What is the total purchase differential (excess of cost over book value)? P150,000 P100,000 P420,000 P330,000

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 11MCQ

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Frankie Corporation purchased 100% of Blake Company for P600,000. At that date, Blake Company had the following book values and market values: Book Value Market Value Cash and receivables 60,000 60,000 Inventory 180,000 230,000 Plant Assets (net) 375,000 475,000 Current liabilities (95,000) (95,000) Long-term debt (215,000) (215,000) Common stock (25,000) Retained earnings (280,000) What is the total purchase differential? Select one: a. P205,000 b. P145,000 c. P295,000 d. P-0-
Platek Enterprises purchases 100 percent of Smith Company for P600,000. At that date Smith Company had the following book value and market values:Accounts Book value Market valueCash and receivables P25,000 P25,000Inventory 125,000 180,000Plant assets (net) 300,000 475,000Current liabilities (60,000) (60,000)Long-term debt (120,000) (120,000)Common stock (15,000)Retained earnings (255,000)What is the worksheet elimination to plant assets at the acquisition date?
Assume that the following balance sheets are stated at book value. The fair market value of James's fixed assets is equal to $9,600. Jurion pays $16,360 for James and raises the needed funds through an issue of long-term debt. Current assets $12,225 Net fixed 36,450 assets Total Jurion Co. Total Current assets $3,490 Net fixed assets 6,640 Current assets Fixed assets Goodwill Total $ 5,420 Long-term debt 9,950 Equity 33,305 $48,675 Total $48,675 Current liabilities James, Inc. $10,130 Current liabilities $ 1,420 Long-term debt 1,990 Equity 6,720 Total $10,130 Construct a postmerger balance sheet assuming that Jurion Co. purchases James, Inc., and the purchase method of accounting is used. (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) Jurion Co., post-merger Current liabilities Long-term debt Equity Total
Sony Co. issued bonds payable amounting to P500,000 for the new assets of JBL Corp. At the time of the acquisition Sony incurred transaction costs of P20,000 in issuing bonds. The followinginformation was available related to JBL’s financial position. Book Value Fair ValueCurrent Assets 250,000 250,000Inventories 400,000 500,000Equipment 200,000 250,000Liabilities 150,000 150,000 What is the amount of gain or loss on disposal of should the acquiree recognized?
Ruben Company purchased $100,000 of Evans Company bonds at 100. Ruben later sold the bonds for $104,500 plus $500 in accrued interest. The journal entry for the sale of the bonds would be debit Cash, $104,500, and Interest Receivable, $500; credit Investments-Evans Company Bonds, $100,000, Gain on Sale of Investments, $4,500, and Interest Revenue, $500 Odebit Cash, $105,000; credit Investments Evans Company Bonds, $100,000, Gain on Sale of Investments, $4,500, and Interest Revenue, $500 debit Cash, $105,000; credit Investments-Evans Company Bonds, $100,000, and Gain on Sale of Investments, $5,000 debit Cash, $105,000; credit Investments-Evans Company Bonds, $104,500, and Interest Revenue, $500
N company purchased debt investment at amortized cost at a discount of P20,000. Subsequently, N sold these bonds at a premium of P28,000. During the period the N held this investment, amortization of discount amounted to P4,000. How much is the gain/loss on the sale of the debt investment?
The Q3 Company purchases P2,000,000 of bonds. The asset has been designated as one at fair value through profit and loss. One year later, 10% of the bonds are sold for P400,000. Total cumulative gains previously recognized in Q3's financial statements in respect of the asset are P100,000. What is the amount of the gain on disposal to be recognized in profit or loss?
1. Winston Corporation purchases all of Harley Company’s stock on June 1 for P1,200,000. At that date, Harley had the following book and market values: Book Value Market Value Cash and Receivables P80,000 P80,000 Inventory 230,000 270,000 Plant Assets (net) 900,000 1,230,000 Cost of Goods Sold 750,000 Operating Expenses 170,000 Dividends 20,000 Liabilities 600,000 600,000 Common Stock 25,000 Retained Earnings 525,000 Sales 1,000,000 What amount of retained earnings is eliminated in the acquisition date worksheet elimination? 2. Banana Company purchases 80 percent of Mango. At the date…
1. Winston Corporation purchases all of Harley Company’s stock on June 1 for P1,200,000. At that date, Harley had the following book and market values: Book Value Market Value Cash and Receivables P80,000 P80,000 Inventory 230,000 270,000 Plant Assets (net) 900,000 1,230,000 Cost of Goods Sold 750,000 Operating Expenses 170,000 Dividends 20,000 Liabilities 600,000 600,000 Common Stock 25,000 Retained Earnings 525,000 Sales 1,000,000 What amount of retained earnings is eliminated in the acquisition date worksheet elimination? Please explain step by step with conclusion. Thank You
The equity accounts of Jordan Company total $2,000,000. On 1/1/X1, Davidson Company purchased 60% of Jordan for $1,985,000. The fair values of net assets are equal to book values. What are goodwill and noncontrolling interests amounts?
1. Winston Corporation purchases all of Harley Company's stock on June 1 for P1,200,000. At that date, Harley had the following book and market values: Book Value Market Value Cash and Receivables P80,000 P80.000 Inventory 230,000 270,000 Plant Assets (net) 900,000 1.230,000 Cost of Goods Sold 750,000 Operating Expenses 170,000 Dividends 20,000 Liabilities 600,000 600,000 Common Stock 25,000 Retained Earnings 525,000 Sales 1,000,000 What amount of retained earnings is eliminated in the acquisition date worksheet elimination?
On January 1, 20X1, ABC acquired 5,000 of XYZ’s bonds denominated at P1,000, 12% interest rate, 5 years, intending to collect contractual cash flows and sell them. The effective rate in the market at that time is 10%. On December 31, 20X1, the market value of the bonds is P5,200,000. ABC changes its business model in managing this financial asset by collecting contractual cash flows representing principal and interest. On the reclassification date, the initial amount of the newly reclassified investment is (Round off your answer to the nearest peso. Round off PVF into 4 decimals.)

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