EBK ADVANCED FINANCIAL ACCOUNTING
12th Edition
ISBN: 9781260165104
Author: Christensen
Publisher: YUZU
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Chapter 1, Problem 1.29P
To determine
Concept Introduction: Business Combination is a process where two entities merge to take the benefit of synergies for a common objective.
To prepare: Journal entries that would appear on P Company’s books to record the combination.
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Price Company issued 8,740 shares of its $20 par value common stock for the net assets of Sims Company in a business combination under which Sims Company will be merged into Price Company. On the date of the combination, Price Company common stock had a fair value of $30 per share. Balance sheets for Price Company and Sims Company immediately prior to the combination were:
Price
Sims
Current assets
$460,540
$61,810
Plant and equipment (net)
529,190
140,940
Total
$989,730
$202,750
Liabilities
$274,100
$53,300
Common stock, $20 par value
558,200
88,000
Other contributed capital
72,870
20,750
Retained earnings
84,560
40,700
Total
$989,730
$202,750
(a)
If the business combination is treated as a purchase and Sims Company’s net assets have a fair value of $209,574, Price Company’s balance sheet immediately after the combination will include goodwill of…
The following book and fair values were available for Westmont Company as of March
Inventory
Land
Buildings
Customer relationships
Accounts payable
Common stock
Additional paid-in capital
Retained earnings, 1/1
Revenues
Expenses
View transaction list
Arturo Company pays $4,000,000 cash and issues 20,000 shares of its $2 par value
common stock (fair value of $50 per share) for all of Westmont's common stock in a
merger, after which Westmont will cease to exist as a separate entity. Stock issue costs
amount to $25,000, and Arturo pays $42,000 for legal fees to complete the
transaction.
Journal entry worksheet
Prepare Arturo's journal entries to record its acquisition of Westmont. (If no entry is
required for a transaction/event, select "No journal entry required" in the first
account field.)
2
Book Value
Fair Value
$630,000 $ 600,000
990,000
2,000,000
800,000
(80,000)
3
Transaction
750,000
1,700,000
Note: Enter debits before credits.
0
(80,000)
(2,000,000)
(500,000)
(360,000)
(420,000)…
PPP Corporation issued ordinary share capital with a par value of P675,000 and a market value of P1,050,000 to
acquire the net asset of SSS Corp. in a business combination. Immediately before the business combination the
book and fair values of the net identifiable assets of PPP and SSS are as follows:
SSS
Book Value Book Value Fair Value
690,000
280,500
PPP
Assets
3,000,000
900,000
Liabilities
813,000
282,000
Determine the amount that should be reported as total assets of the combined entity immediately following the
business combination.
Chapter 1 Solutions
EBK ADVANCED FINANCIAL ACCOUNTING
Ch. 1 - What types of circumstances would encourage...Ch. 1 - How would the decision to dispose of a segment of...Ch. 1 - Prob. 1.3QCh. 1 - Prob. 1.4QCh. 1 - Prob. 1.5QCh. 1 - Prob. 1.6QCh. 1 - Prob. 1.7QCh. 1 - Prob. 1.8QCh. 1 - Prob. 1.9QCh. 1 - Prob. 1.10Q
Ch. 1 - Prob. 1.11QCh. 1 - Prob. 1.12QCh. 1 - Prob. 1.13QCh. 1 - Prob. 1.14QCh. 1 - Within the measurement period following a business...Ch. 1 - Prob. 1.16QCh. 1 - Prob. 1.1CCh. 1 - Prob. 1.2CCh. 1 - Prob. 1.3CCh. 1 - Prob. 1.4CCh. 1 - Risks Associated with Acquisitions Not all...Ch. 1 - Prob. 1.6CCh. 1 - Prob. 1.1.1ECh. 1 - Prob. 1.1.2ECh. 1 - Prob. 1.1.3ECh. 1 - Multiple-Choice Questions on Complex Organizations...Ch. 1 - Prob. 1.1.5ECh. 1 - Prob. 1.2.1ECh. 1 - Prob. 1.2.2ECh. 1 - Multiple-Choice Questions on Recording Business...Ch. 1 - Prob. 1.2.4ECh. 1 - Multiple-Choice Questions on Recording Business...Ch. 1 - Multiple-Choice Questions on Reported Balances...Ch. 1 - Multiple-Choice Questions on Reported Balances...Ch. 1 - Prob. 1.3.3ECh. 1 - Prob. 1.3.4ECh. 1 - Prob. 1.4.1ECh. 1 - Prob. 1.4.2ECh. 1 - Prob. 1.4.3ECh. 1 - Multiple-Choice Questions Involving Account...Ch. 1 - Prob. 1.4.5ECh. 1 - Prob. 1.5ECh. 1 - Prob. 1.6ECh. 1 - Prob. 1.7ECh. 1 - Prob. 1.8ECh. 1 - Prob. 1.9ECh. 1 - Prob. 1.10ECh. 1 - Balances Reported Following Combination Palm...Ch. 1 - Goodwill Recognition Spur Corporation reported the...Ch. 1 - Acquisition Using Debentures Planter Corporation...Ch. 1 - Bargain Purchase Using the data resented in E1-13,...Ch. 1 - Prob. 1.15ECh. 1 - Prob. 1.16ECh. 1 - Prob. 1.17ECh. 1 - Prob. 1.18ECh. 1 - Prob. 1.19ECh. 1 - Prob. 1.20ECh. 1 - Prob. 1.21ECh. 1 - Prob. 1.22ECh. 1 - Prob. 1.23ECh. 1 - Prob. 1.24PCh. 1 - Prob. 1.25PCh. 1 - Prob. 1.26PCh. 1 - Acquisition in Multiple Steps Peal Corporation...Ch. 1 - Prob. 1.28PCh. 1 - Prob. 1.29PCh. 1 - Prob. 1.30PCh. 1 - Prob. 1.31PCh. 1 - Computation of Account Balances Saspro Division is...Ch. 1 - Prob. 1.33PCh. 1 - Prob. 1.34PCh. 1 - Prob. 1.35PCh. 1 - Business Combination Following are the balance...Ch. 1 - Prob. 1.37PCh. 1 - Prob. 1.38PCh. 1 - Prob. 1.39PCh. 1 - Prob. 1.40P
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