Don't use AI In a pre-2009 business combination, Acme Company acquired all of Brem Company's assets and liabilitiesfor cash. After the combination, Acme formally dissolved Brem. At the acquisition date, the following bookand fair values were available for the Brem Company accounts:ItemsBook Values Fair ValuesCurrent assets$ 88,200$88,200Equipment131,000198,000TrademarkLiabilities352,000(74,200)(74,200)(100,000)(45,000)Common stockRetained earningsIn addition, Acme paid an investment bank $30,900 cash for assistance in arranging the combination.Required:a. Using the legacy purchase method for pre-2009 business combinations, prepare Acme's entry to recordits acquisition of Brem in its accounting records assuming the cash amounts of $651,900 and $446,300were paid to the former owners of Bremb. How would these journal entries change if the acquisition occurred post-2009 and therefore Acmeapplied the acquisition method?Record the acquisition of Brem using thepurchase method assuming $446,300 waspaid to the former owners of Brem.Note: If no entry is required for a transaction/event, select"No journal entry required" in the first account field.

In the accounting scenario presented, Acme Company has acquired all assets and liabilities of Brem…

Answered: In a pre-2009 business combination,…

Auditing: A Risk Based-Approach to Conducting a Quality Audit

10th Edition

ISBN:9781305080577

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter16: Advanced Topics Concerning Complex Auditing Judgments

Section: Chapter Questions

Problem 55RSCQ

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In a pre-2009 business combination, Acme Company acquired all of Brem Company's assets and liabilities for cash. After the combination, Acme formally dissolved Brem. At the acquisition date, the following book and fair values were available for the Brem Company accounts: Items Current assets Equipment Trademark Liabilities View transaction list Book Values $ 88,400 131,000 Common stock Retained earnings In addition, Acme paid an investment bank $29,200 cash for assistance in arranging the combination. (74,400) (100,000) (45,000) Required: a. Using the legacy purchase method for pre-2009 business combinations, prepare Acme's entry to record its acquisition of Brem in its accounting records assuming the cash amounts of $668,400 and $457,400 were paid to the former owners of Brem. b. How would these journal entries change if the acquisition occurred post-2009 and therefore Acme applied the acquisition method? Note: If no entry is required for a transaction/event, select "No Journal entry…
In a pre-2009 business combination, Acme Company acquired all of Brem Company’s assets and liabilities for cash. After the combination Acme formally dissolved Brem. At the acquisition date, the following book and fair values were available for the Brem Company accounts:In addition, Acme paid an investment bank $25,000 cash for assistance in arranging the combination.a. Using the legacy purchase method for pre-2009 business combinations, prepare Acme’s entry to record its acquisition of Brem in its accounting records assuming the following cash amounts were paid to the former owners of Brem:1. $610,000.2. $425,000.b. How would these journal entries change if the acquisition occurred post-2009 and therefore Acme applied the acquisition method?
Putin Company acquired the assets and assumed the liabilities of Joni Company on January 1, 2018, paying OMR 4,500,000 cash. Immediately prior to the acquisition, Joni Company's balance sheet was as follows: BOOK VALUE FAIR VALUE Accounts receivable 240,000 220,000 Inventory 290,000 320,000 Land 960,000 1,508,000 Buildings 1,020,000 1,392,000 Total 2,510,000 3,440,000 Accounts payable 270,000 270,000 Note payable 600,000 600,000 Common stock, $5 par 420,000 Other contributed capital…
Allerton Company acquires all of Deluxe Company’s assets and liabilities for cash on January 1, 2018, and subsequently formally dissolves Deluxe. At the acquisition date, the following book and fair values were available for the Deluxe Company accounts:Prepare Allerton’s entry to record its acquisition of Deluxe in its accounting records assuming the following cash exchange amounts:1. $145,000.2. $110,000.
Pritano Company acquired all the net assets of Succo Company on December 31, 2013, for $2,185,400 cash. The balance sheet of Succo Company immediately prior to the acquisition showed: Book value Fair value Current assets $ 871,440 $871,440 Plant and equipment 1,025,090 1,437,590 Total $1,896,530 $2,309,030 Liabilities $194,060 $207,670 Common stock 484,800 Other contributed capital 632,900 Retained earnings 584,770 Total $1,896,530 As part of the negotiations, Pritano agreed to pay the stockholders of Succo $356,690 cash if the post-combination earnings of Pritano averaged $2,185,400 or more per year over the next two years. The estimated fair value of the contingent consideration was $143,480 on the date of the acquisition. (a) Prepare the journal entry on the books of Pritano to record the acquisition on December 31, 2013. (If no entry is required, select…
Pritano Company acquired all the net assets of Succo Company on December 31, 2013, for $2,234,440 cash. The balance sheet of Succo Company immediately prior to the acquisition showed: Book value Fair value Current assets $ 962,320 $962,320 Plant and equipment 1,186,440 1,337,450 Total $2,148,760 $2,299,770 Liabilities $191,390 $214,050 Common stock 471,160 Other contributed capital 584,100 Retained earnings 902,110 Total $2,148,760 As part of the negotiations, Pritano agreed to pay the stockholders of Succo $385,210 cash if the post-combination earnings of Pritano averaged $2,234,440 or more per year over the next two years. The estimated fair value of the contingent consideration was $148,740 on the date of the acquisition. (a) Prepare the journal entry on the books of Pritano to record the acquisition on December 31, 2013. (If no entry is required, select…
Allerton Company acquires all of Deluxe Company’s assets and liabilities for cash on January 1, 2018, and subsequently formally dissolves Deluxe. At the acquisition date, the following book and fair values were available for the Deluxe Company accounts: BookValues FairValues Current assets $ 20,250 $ 20,250 Building 110,250 65,150 Land 17,250 28,550 Trademark 0 34,600 Goodwill 37,500 ? Liabilities (50,250 ) (50,250 ) Common stock (100,000 ) Retained earnings (35,000 ) 1&2. Prepare Allerton’s entry to record its acquisition of Deluxe in its accounting records assuming the following cash exchange amounts: $132,000 and $86,000. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Pritano Company acquired all the net assets of Succo Company on December 31, 2013, for $2,145,600 cash. The balance sheet of Succo Company immediately prior to the acquisition showed: Book value Fair value Current assets $ 995,110 $995,110 Plant and equipment 979,390 1,375,740 Total $1,974,500 $2,370,850 Liabilities $187,040 $235,560 Common stock 524,720 Other contributed capital 588,400 Retained earnings 674,340 Total $1,974,500 As part of the negotiations, Pritano Company agreed to issue 9,230 additional shares of its $10 par value common stock to the stockholders of Succo if the average postcombination earnings over the next three years equaled or exceeded $2,481,300. The fair value of the contingent consideration on the date of acquisition was estimated to be $219,700. The contingent consideration (earnout) was classified as equity rather than as a liability.…
S acquired 100 percent of F for P275,000. At the date of acquisition, F had the following book and market values: (see image below) What is the amount of the “Investment in F” account on S’s financial records at the acquisition date?
Preston Company acquired the assets (except for cash) and assumed the liabilities of Saville Company. Immediately prior to the acquisition, Saville Company’s balance sheet was as follows: Book Value Fair Value Cash $122,900 $122,900 Receivables (net) 207,560 232,240 Inventory 361,510 389,840 Plant and equipment (net) 459,200 573,420 Land 417,050 617,650 Total assets $1,568,220 $1,936,050 Current Liabilities $526,250 $596,650 Common stock ($5 par value) 477,680 Other contributed capital 126,920 Retained earnings 437,370 Total equities $1,568,220 (a) Prepare the journal entries on the books of Preston Company to record the purchase of the assets and assumption of the liabilities of Saville Company if the amount paid was $1,567,060 in cash. (If no entry is required, select "No Entry" for the account titles and enter 0 for the…
On January 1, 2024, Flower Company purchased 100% of the common stock of Cornell Company for $380,000 cash. Fair values differed from book values as follows: Fair value Inventory $45,000 Land 50,000 Buildings 200,000 Bonds Payable 95,000 The trial balances of the companies at the acquisition date are as follows: Trial Balance Parent Sub. Account Titles Company Company Assets: Inventory 150,000 30,000 Cash 639,000 165,000 Investment in Sub. Company 380,000 Land 20,000 30,000 Buildings, net 250,000 180,000 Goodwill 40,000 Liabilities and Equity: Current Liabilities 191,000 65,000 Bonds Payable 500,000 100,000 Common Stock 100,000 50,000 Other Paid-in Capital 150,000 70,000 Retained Earnings 538,000 120,000 Which of the following is not one of the eliminations and adjustments included on the consolidation worksheet…
Car Inc. wants to purchase the net assets of Paint Inc. for purposes of horizontal consolidation and will pay $750,000 cash for them. The balance sheet for Paint Inc. on the date of purchase is as follows: Assets Liabilities & Owners' Equity Book Value Fair Market Value Book Value Fair Market Value Cash $0 $0 A/P $75,000 $75,000 A/R 60,000 50,000 Notes Payable 25,000 25,000 Inventory 75,000 80,000 Mortgage Payable 50,000 50,000 Net Fixed Assets 150,000 200,000 Total Liabilities: $150,000 Patents 0 25,000 Common Stock 50,000 Retained Earnings 85,000 Total Equity: $135,000 Total Assets: $285,000 Total Liabilities & O.E.: $285,000 A) Prepare the journal entry amounts for this asset acquisition on the books of Car Inc. by entering the proper debit and credit amounts in the gray-shaded cells below. Account Debits Credits A/R Inventory Net…

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