RR Records Inc. acquired all of DD Studios’ voting shares on January 1, 20x1, for P280,000. RR’s balance sheet immediately after the combination contained the following balances: (see image 1) DD’s balance sheet at acquisition contained the following balances: (see image 2) On the date of combination, the inventory held by DD had a fair value of P170,000, and its buildings and recording equipment had a value of P375, 000. Goodwill reported by DD resulted from a purchase of SS Enterprises in 20x1. SS was liquidated and its assets and liabilities were brought onto DD’s books. Compute the balance of Retained Earnings to be reported in the consolidated balance sheet immediately after the acquisition.
RR Records Inc. acquired all of DD Studios’ voting shares on January 1, 20x1, for P280,000. RR’s balance sheet immediately after the combination contained the following balances: (see image 1) DD’s balance sheet at acquisition contained the following balances: (see image 2) On the date of combination, the inventory held by DD had a fair value of P170,000, and its buildings and recording equipment had a value of P375, 000. Goodwill reported by DD resulted from a purchase of SS Enterprises in 20x1. SS was liquidated and its assets and liabilities were brought onto DD’s books. Compute the balance of Retained Earnings to be reported in the consolidated balance sheet immediately after the acquisition.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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RR Records Inc. acquired all of DD Studios’ voting shares on January 1, 20x1, for P280,000. RR’s balance sheet immediately after the combination contained the following balances: (see image 1) DD’s balance sheet at acquisition contained the following balances: (see image 2) On the date of combination, the inventory held by DD had a fair value of P170,000, and its buildings and recording equipment had a value of P375, 000.
Compute the balance of
Transcribed Image Text:Image 1
RR Records, Inc.
Balance Sheet
January 1, 20x4
P120,000 Accounts Payable
110,000 Taxes Payable
70,000 Notes Payable
350,000
280,000 Retained Earnings
P930.000
P 75,000
50,000
Cash and Receivables .
Inventory..
Land.
Buildings and Equipment (net).
Investment in DD stock..
300,000
400,000
Common Stock.
105,000
P930.000
Image 2+
DD Studios
Balance Sheet
January 1, 20x4
P 40,000 Accounts Payable
180,000 Notes Payable.
350,000 Common Stock.
30,000 Additional Paid- in Capital ..
P 90,000
250,000
Cash and Receivables.
Inventory ..
Buildings and Equipment (net).
Goodwill .
100,000
200,000
(40,000)
Retained Earnings.
P600.000
P600.000
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