ADVANCED FINANCIAL ACCOUNTING IA
12th Edition
ISBN: 9781260545081
Author: Christensen
Publisher: MCG
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Question
Chapter 1, Problem 1.2C
1
To determine
Acquisition
It is a process under which one company buysmajority of shares of another company and gains the control of the other company.
One reason for which company A purchased majority of shares of company T and the benefit of this acquisition to company A.
2
To determine
Purchase consideration
Purchase consideration represents the amount that purchasing company pays to the acquired company in exchange of the assets and liabilities.
The amount of consideration in the acquisition of company T by company A.
3
To determine
Purchase consideration
Purchase consideration represents the amount that purchasing company pays to the acquired company in exchange of the assets and liabilities.
How purchase consideration was satisfied in the given acquisition case.
4
To determine
Acquisition
It is a process under which one company buysmajority of shares of another company and gains the control of the other company.
The type of acquisition that would describe the given case of acquisition.
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Instructions
During January 2020, Long Corporation for the first time decided to acquire some equity securities as a means of putting some of its idle cash to work. The securities are classified as trading securities. At March 31, when Long prepares its first quarter
financial statements, the following information about the acquired securities is available:
Securities
Cost
Market
1
$52,000 550,000
2
32,000 29,000
3
35,000 27.000
Required:
a. Prepare the journal entries to record the acquisition in January and valuation at the end of the first quarter of 2020.
b. Assume that on June 30, 2020, the company still has this same portfolio The market value of 1 is S57.000 2 is S30 000 and 3 s 531.000
What journal entry if any should be prepared at the end of the second quarter?
c. On August 15, 2020, Long Corporation sold Security 3 for $33.000 Prepare the joumal entry to record this transaction.
TransWorld Communications Inc., a large telecommunications company, is evaluating the possible acquisition of Georgia Cable Company (GCC), a regional cable company. TransWorld's analysts project the post-merger data for GCC (in thousands of dollars) gathered in the Excel Online file below. If the acquisition is made, it will occur on January 1, 2018. All cash flows shown in the income statements are assumed to occur at the end of the year. GCC currently has a capital structure of 40% debt, but Trans World would increase that to 50% if the acquisition were made. GCC, if independent, would pay taxes at 20%; but its income would be taxed at 30% if it were consolidated. GCC's current market-determined beta is 1.35, and its investment bankers think that its beta will rise to 1.50 if the debt ratio were increased to 50%. The cost of goods sold is expected to be 65% of sales, but it could vary somewhat. Depreciation-generated funds would be used to replace worn-out equipment, so they would…
BAQ is a listed entity with a financial year end of 31 March. At 31 March 2018, it had 8,000,000 ordinary shares in issue. The directors of BAQ wish to expand the business’s operations by acquiring competitor entities. They intend to make no more than one acquisition in any financial year. The directors are about to meet to discuss two possible acquisitions. Their principal criterion for the decision is the likely effect of the acquisition on group earnings per share. Details of the possible acquisitions are as follows:
Acquisition of CBR
100% of the share capital of CBR could be acquired on 1 October 2018 for a new issue of shares in BAQ;
CBR has 4 00,000 ordinary shares in issue;
Four CBR shares would be exchanged for three new shares in BAQ;
CBR’s profit after tax for the year ended 31 March 2018 was N$625,000 and the entity’s directors are projecting a 10% increase in this figure for the year ending 31 March 2019.
Acquisition of DCS
80% of the…
Chapter 1 Solutions
ADVANCED FINANCIAL ACCOUNTING IA
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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