5. The financial statements for Jode Inc. and Lakely Corp., just prior to their combination,for the year ending December 31, 2009, follow. Lakely's buildings were undervalued on itsfinancial records by $60,000, and equipment is undervalued by $40,000.RevenuesExpensesNet incomeRetained earnings, January 1, 2009Net income (from above)Dividends paidRetained earnings, December 31, 2009CashReceivables and inventoryBuildings (net)Equipment (net)Total assetsLiabilitiesCommon stockAdditional paid-in capitalRetained earnings, 12/31/09Total liabilities and stockholders' equityJode Inc.$1,300,000(1,180,000)$120,000$700,000120,000(110,000)$710,000$160,000240,000700,000700,000$1,800,000$250,000750,00090,000710,000$1,800,000Lakely Corp.$500,000( 290,000)$210,000$500,000210,000(110,000)$600,000$120,000240,000350,000600,000$1,310,000$195,000430,00085,000600,000$1,310,000On December 31, 2009, Jode issued 50,000 new shares of its $10 par value stock to theowners of Lakely in exchange for all of the outstanding shares of that company. Jode's shareshad a fair value on that date of $30 per share. Besides the undervalued buildings andequipment, all other assets and liabilities are fairly valued. The Lakely Corporation isdissolved, and only Jode Inc. continues.Required: Prepare the entry by Jode to record the acquisition of Lakely Corporation.

Goodwill is the excess cost paid by the succeeding company at the time of acquisition. Goodwill is…

Answered: Required: Prepare the entry by Jode to…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Provide the specific nine-digit FASB Codification citation (XXX-XX-XXX-X) that describes the disclosure requirements that must be made by publicly traded companies for a LIFO liquidation. (Hint: Look in the SEC Materials section.)
From page 7-1 of the VLN, acquisition cost would NOT include: A. Purchase price. B. Transportation cost to get the asset ready to be used. C. Sales taxes. D. Cost incurred to operate the asset.
How are acquisition costs recorded in a merger?
Acquisition Entries, Acquisition Costs, Bargain Gain Plastic Corporation is contemplating a business combination with Steel Corporation at December 31, 2021. Steel's condensed balance sheet on that date appears below: Assets Cash and receivables Inventory Equity method investments Land Buildings and equipment Patents Total assets Liabilities and Stockholders' Equity Liabilities Common stock Retained earnings Total liabilities and equity Cash and receivables Inventory Equity method investments Land Description Buildings and equipment Patents Goodwill Liabilities Required Prepare the journal entry to record the business combination of Plastic and Steel for each of the following acquisition costs and combination methods. (a) Plastic acquires Steel as a merger for $250,000 cash. Other direct cash acquisition costs are $20,000. General Journal Description Cash and receivables Inventory Equity method investments. Land Liabilities Cash Buildings and equipment Patents ÷ Description (b) Plastic…
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What important issues should management consider prior to a merger or acquisition? What are the current GAAP requirements for the type of merger/acquisition?
Explain the concepts of business acquisitions, mergers and consolidation of financial statements kindly explain in detail
HOW DOES A COMPANY REALLY DECIDE WHICH INVESTMENT METHOD TO APPLY? Pilgrim Products, Inc., buys a controlling interest in the common stock of Crestwood Corporation. Shortly after the acquisition, a meeting of Pilgrim's accounting department is convened to discuss the internal reporting procedures required by the ownership of this subsidiary. Each member of the staff has a definite opinion as to whether the equity method, initial value method, or partial equity method should be adopted. To resolve this issue, Pilgrim's chief financial officer outlines several of her concerns about the decision. I already understand how each method works. I know the general advantages and disadvantages of all three. I realize, for example, that the equity method provides more detailed information whereas the initial value method is much easier to apply. What I need to know are the factors specific to our situation that should be considered in deciding which method to adopt. I must make a recommendation…
Explain how purchase accounting is implementedin a merger. Does the accounting profession nowrequire this method? How is any premium that theacquiring firm paid over the acquired firm’s bookvalue treated subsequent to a merger?
The investment in subsidiary should be recorded on the parent’s book at?
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In The Process Of the Acquisition, ABC Incorporation Paid In Cash the Following Expenses US Accounting fees 30,000 Travel expenses 10,000 Accounting fees (SEC) 10,000 SEC filing fees 20,000 Required: Prepare the journal entry to record the acquisition expenses

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