In the year ended June 30 2021, Lorelai Ltd, a reporting entity, acquired the assets and assumed the liabilities of the Rory Teens operation from Gilmore Ltd for $10,000,000. At the date of acquisition, the fair values of the net separable identifiable assets and liabilities of the operation were $8,000,000 and $1,000,000 respectively. Based on this information, the transaction has resulted in: O a. The acquisition of certain assets and liabilities, which is not a business combination since Rory Teens is not managed to provide a return to investors but only to provide a return to Gilmore Ltd. O b. None of these answers is correct. Oc. The acquisition of certain assets and liabilities, which is not a business combination since Rory Teens is not a business but simply part of the Gilmore Ltd business. O d.A business combination of Lorelai Ltd and Rory Teens.

In the year ended June 30 2021, Lorelai Ltd, a reporting entity, acquired the assets and assumed the liabilities of the Rory Teens operation from Gilmore Ltd for $10,000,000. At the date of acquisition, the fair values of the net separable identifiable assets and liabilities of the operation were $8,000,000 and $1,000,000 respectively. Based on this information, the transaction has resulted in: O a. The acquisition of certain assets and liabilities, which is not a business combination since Rory Teens is not managed to provide a return to investors but only to provide a return to Gilmore Ltd. O b. None of these answers is correct. Oc. The acquisition of certain assets and liabilities, which is not a business combination since Rory Teens is not a business but simply part of the Gilmore Ltd business. O d.A business combination of Lorelai Ltd and Rory Teens.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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On January 1, 2021, Parent Co. acquired the identifiable net asset of Subsidiary, Inc. On this date, the identifiable net assets acquired and liabilities assumed have fair values of P7,680,000 and P4,320,000, respectively. Parent Co. incurred the following acquisition-related costs: legal fees, P48,000, due diligence costs, P480,000; and general and administrative costs of maintaining an internal acquisition, P96,000. As consideration, Parent Co. transferred 9,600 of its own shares with par value and fair value per share of P400 and P500, respectively, to Subsidiary's former owners. Costs of registering the shares (previously issued and newly issued) amounted to P192,000 (P24,000 pertains to listing fees of previously issued shares). How much is the total amount charged to profit or loss in relation to this transaction?
On January 1, 2025, Lili Company acquired the identifiable net assets of Jen Inc. On this date, the identifiable assets acquired and liabilities assumed have fair values of P 7,680,000 and P4,320,000 respectively. Lili Co. incurred the following acquisition related costs: legal fees, P48,000; due diligence costs, P48,000; and general and administrative costs of maintaining an internal acquisition, P96,000. As consideration, Lili Co. transferred 9,600 of its own shares with par value and fair value per share of P400 and P500 respectively, too Jen's former owners. Costs of registering the shares (previously issued and newly issued) amounted to P192,000 (P24,000 pertains to listing fees of previously issued shares). How much is the total amount charged to profit or loss in relation to the transaction above?
Use the following to answer questions 8 through 10: On May 1, 2021, Jazzie Co. agreed to sell the assets of its Mister Division to Shawna Inc. for $80 million. The sale was completed on December 31, 2021. Jazzie’s year ends on December 31st. The following additional facts pertain to the transaction: The Mister Division qualifies as a component of an entity as defined by GAAP. Mister's net assets totaled $48 million on Jazzie's books at the time of the sale. Mister incurred a pre-tax operating loss of $10 million in 2021. Jazzie’s income tax rate is 40%. In the 2021 income statement for Jazzie Co., they would report after tax income from discontinued operations of: Group of answer choices $9.2 million. $13.2 million. $22 million. $26 million.
Illustration 1. Measuring Goodwill/Gain on Bargain PurchaseOn January 1, 2021, Amahan Co. acquired all of the assets and assumed all of the liabilities of Anak, Inc. As of this date, the carrying amounts and fair values of the assets and liabilities of Anak acquired by Amahan are shown below: On the negotiation for the business combination, Amahan Co. incurred the followingtransaction costs: P25,000.00 for legal fees; P 75,000.00 for accounting fees and P 50,000.00 for consultancy fees. Case 2: Amahan Co. paid P1,000,000.00 cash as consideration for the assets and liabilities ofAnak, Inc. 1. How much is the transaction costs incurred during the business combination?a. 50,000.00b. 75,000.00c. 125,000.00d. 150,000.002. How much is the Consideration Transferred?a. 1,000,000.00b. 1,350,000.00c. 1,500,000.00d. 1,850,000.00 3. How Much is the Non-Controlling Interest in the acquiree?a. 0.00b. 150,000.00c. 310,000.00d. 500,000.000
Illustration 1. Measuring Goodwill/Gain on Bargain PurchaseOn January 1, 2021, Amahan Co. acquired all of the assets and assumed all of the liabilities of Anak, Inc. As of this date, the carrying amounts and fair values of the assets and liabilities of Anak acquired by Amahan are shown below: On the negotiation for the business combination, Amahan Co. incurred the followingtransaction costs: P25,000.00 for legal fees; P 75,000.00 for accounting fees and P 50,000.00 for consultancy fees. Case 2: Amahan Co. paid P1,000,000.00 cash as consideration for the assets and liabilities of Anak, Inc. 1. How much is the previously held equity interest in the acquiree?a. 0.00b. 150,000.00c. 310,000.00d. 500,000.00 2. .How much is the fair value of the net identifiable assets acquired?a. 1,965,000.00b. 1,315,000.00c. 1,310,000.00d. 1,190,000.00 3.How much is the goodwill (gain on bargain purchase) on the business combination?a. (465,000.00)b. 185,000.00c. (190,000.00)d. 310,000.00
Illustration 1. Measuring Goodwill/Gain on Bargain PurchaseOn January 1, 2021, Amahan Co. acquired all of the assets and assumed all of the liabilities of Anak, Inc. As of this date, the carrying amounts and fair values of the assets and liabilities of Anak acquired by Amahan are shown below: On the negotiation for the business combination, Amahan Co. incurred the followingtransaction costs: P25,000.00 for legal fees; P 75,000.00 for accounting fees and P 50,000.00 for consultancy fees. 1. How much is the goodwill (gain on bargain purchase) on the businesscombination?a. (465,000.00)b. 185,000.00c. (190,000.00)d. 310,000.00
Illustration 1. Measuring Goodwill/Gain on Bargain PurchaseOn January 1, 2021, Amahan Co. acquired all of the assets and assumed all of the liabilities of Anak, Inc. As of this date, the carrying amounts and fair values of the assets and liabilities of Anak acquired by Amahan are shown below: On the negotiation for the business combination, Amahan Co. incurred the followingtransaction costs: P25,000.00 for legal fees; P 75,000.00 for accounting fees and P 50,000.00 for consultancy fees. Case 1: Amahan Co. paid P1,000,000.00 cash and P 350,000.00 land with fair value ofP500,000.00 as consideration for the assets and liabilities of Anak, Inc.1. How much is the transaction costs incurred during the business combination?a. 50,000.00b. 75,000.00 c. 125,000.00d. 150,000.00 2. How much is the Consideration Transferred?a. 1,000,000.00b. 1,350,000.00c. 1,500,000.00d. 1,850,000.00 3. How Much is the Non-Controlling Interest in the acquiree?a. 0.00b. 150,000.00c. 310,000.00d. 500,000.000
Illustration 1. Measuring Goodwill/Gain on Bargain PurchaseOn January 1, 2021, Amahan Co. acquired all of the assets and assumed all of the liabilities of Anak, Inc. As of this date, the carrying amounts and fair values of the assets and liabilities of Anak acquired by Amahan are shown below: On the negotiation for the business combination, Amahan Co. incurred the followingtransaction costs: P25,000.00 for legal fees; P 75,000.00 for accounting fees and P 50,000.00 for consultancy fees. 1. How much is the previously held equity interest in the acquiree?a. 0.00b. 150,000.00c. 310,000.00d. 500,000.00 2. How much is the fair value of the net identifiable assets acquired?a. 1,965,000.00b. 1,315,000.00c. 1,310,000.00d. 1,190,000.00 3. How much is the goodwill (gain on bargain purchase) on the businesscombination?a. (465,000.00)b. 185,000.00c. (190,000.00)d. 310,000.00
Snowy Ltd acquires Pax Ltd on 1 July 2018 for $5,000,000 being the fair value of the consideration transferred. At that date, Pax Ltd’s net identifiable assets have a fair value of $4,400,000. Goodwill of $600,000 is therefore thedifference between the aggregate of the consideration transferred and the net identifiable assets acquired.The fair value of the net identifiable assets of Pax Limited are determined as follows:($000)Patent rights200Machinery1,000Buildings1,500Land2,3005,000Less: Bank loan600Net assets4,400At the end of the reporting period of 30 June 2019, the management of Snowy Ltd determines that the recoverable amount of the cash-generating unit, which is considered to be PaxLtd, totals $4,500,000. The carrying amount of the net identifiable assets of Pax Ltd, excluding goodwill, is unchanged and remains at $4,400,000.Required: a)Prepare the journal entry to account for any impairment of goodwill.
Snowy Ltd acquires Pax Ltd on 1 July 2018 for $5,000,000 being the fair value of the consideration transferred. At that date, Pax Ltd’s net identifiable assets have a fair value of $4,400,000. Goodwill of $600,000 is therefore thedifference between the aggregate of the consideration transferred and the net identifiable assets acquired. The fair value of the net identifiable assets of Pax Limited are determined as follows: ($000) Patent rights 200 Machinery 1,000 Buildings 1,500 Land 2,300 5,000 Less: Bank loan 600 Net assets 4,400 At the end of the reporting period of 30 June 2019, the management of Snowy Ltd determines that the recoverable amount of the cash-generating unit, which is considered to be PaxLtd, totals $4,500,000. The carrying amount of the net identifiable assets of Pax Ltd, excluding goodwill, is unchanged and remains at $4,400,000. Required: a)Prepare the journal…
On 1 July 2022, Dean Ltd acquired the remaining 80% of the issued shares of Lewis Ltd for shares in Dean Ltd with a fair value of $1 000 000. At that date, the financial statements of Lewis Ltd showed the following information. All the assets and liabilities of Lewis Ltd were recorded at amounts equal to their fair values at the acquisition date, except some equipment recorded at $50 000 below its fair value with a related accumulated depreciation of $80 000. Assume the equipment has not been revalued in the subsidiaries accounts. Also, Dean Ltd identified at acquisition date a contingent liability related to a lawsuit where Lewis Ltd was sued by a former supplier and attached a fair value of $40 000 to that liability. The previous held interest by Dean Ltd in Lewis Ltd (ie 20% of the issued shares) was recognised by in Dean Ltd.’s accounts at the fair value at acquisition date of $250 000. Dean Ltd incurred $15 000 in acquisition related costs including $10 000 in share issue costs.…
Snowy Ltd acquires Pax Ltd on 1 July 2018 for $5,000,000 being the fair value of the considerationtransferred. At that date, Pax Ltd’s net identifiable assets have a fair value of $4,400,000. Goodwill of$600,000 is therefore the difference between the aggregate of the consideration transferred and thenet identifiable assets acquired.The fair value of the net identifiable assets of Pax Limited are determined as follows:($000)Patent rights 200Machinery 1,000Buildings 1,500Land 2,3005,000Less: Bank loan 600Net assets 4,400At the end of the reporting period of 30 June 2019, the management of Snowy Ltd determines thatthe recoverable amount of the cash-generating unit, which is considered to be Pax Ltd, totals$4,500,000. The carrying amount of the net identifiable assets of Pax Ltd, excluding goodwill, isunchanged and remains at $4,400,000.Required:a) Prepare the journal entry to account for any impairment of goodwill

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