Soft Bound Version for Advanced Accounting 13th Edition
13th Edition
ISBN: 9781260110579
Author: Hoyle
Publisher: McGraw Hill Education
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Chapter 2, Problem 22P
The following book and fair values were available for Westmont Company as of March 1.
| Book Value | Fair Value | |
| Inventory | $ 630,000 | $ 600,000 |
| Land | 750,000 | 990,000 |
| Buildings | 1,700,000 | 2,000,000 |
| Customer relationships | –0– | 800,000 |
| Accounts payable | (80,000) | (80,000) |
| Common stock | (2,000,000) | |
| Additional paid-in capital | (500,000) | |
| (360,000) | ||
| Revenues | (420,000) | |
| Expenses | 280,000 |
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. Prepare Arturo’s
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The following book and fair values were available for Westmont Company as of March 1.
Book value
Fair value
Inventory
$ 630,000
$ 600,000
Land
750,000
990,000
Buildings
1,700,000
2,000,000
Customer relationships
–0–
800,000
Accounts payable
(80,000)
(80,000)
Common stock
(2,000,000)
Additional paid-in capital
(500,000)
Retained earnings, 1/1
(360,000)
Revenues
(420,000)
Expenses
280,000
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.
Required
Prepare Arturo’s journal entries to record its acquisition of Westmont.
The following book and fair values were available for Westmont Company as of March 1.
Book Value
Fair Value
Inventory
$
245,500
$
203,750
Land
820,500
1,072,500
Buildings
2,115,000
2,457,750
Customer relationships
0
833,250
Accounts payable
(96,000
)
(96,000
)
Common stock
(2,000,000
)
Additional paid-in capital
(500,000
)
Retained earnings, 1/1
(413,000
)
Revenues
(494,000
)
Expenses
322,000
Arturo Company pays $4,160,000 cash and issues 22,200 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 $31,900 and Arturo pays $51,200 for legal fees to complete the transaction.
Prepare Arturo’s journal entries to record its acquisition of Westmont.
The following book and fair values were available for Westmont Company as of March 1.
Book Value
Fair Value
Inventory
$
296,000
$
242,750
Land
766,500
1,034,250
Buildings
2,150,000
2,453,000
Customer relationships
0
846,750
Accounts payable
(106,500
)
(106,500
)
Common stock
(2,000,000
)
Additional paid-in capital
(500,000
)
Retained earnings 1/1
(428,000
)
Revenues
(467,000
)
Expenses
289,000
Arturo Company pays $3,400,000 cash and issues 25,400 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 $25,300 and Arturo pays $51,100 for legal fees to complete the transaction.
Prepare Arturo’s journal entry to record its acquisition of Westmont. (If no entry is required for a transaction/event, select "No journal entry…
Chapter 2 Solutions
Soft Bound Version for Advanced Accounting 13th Edition
Ch. 2 - Prob. 1QCh. 2 - Prob. 2QCh. 2 - What does the term consolidated financial...Ch. 2 - Within the consolidation process, what is the...Ch. 2 - Prob. 5QCh. 2 - Prob. 6QCh. 2 - Prob. 7QCh. 2 - Prob. 8QCh. 2 - Prob. 9QCh. 2 - Prob. 10Q
Ch. 2 - Prob. 11QCh. 2 - Which of the following does not represent a...Ch. 2 - Prob. 2PCh. 2 - Prob. 3PCh. 2 - Prob. 4PCh. 2 - Prob. 5PCh. 2 - An acquired entity has a long-term operating lease...Ch. 2 - When does gain recognition accompany a business...Ch. 2 - Prob. 8PCh. 2 - Prob. 9PCh. 2 - Prob. 10PCh. 2 - On June 1, Cline Co. paid 800,000 cash for all of...Ch. 2 - On May 1, Donovan Company reported the following...Ch. 2 - Prob. 13PCh. 2 - Prob. 14PCh. 2 - Prob. 15PCh. 2 - Prob. 16PCh. 2 - On its acquisition-date consolidated balance...Ch. 2 - On its acquisition-date consolidated balance...Ch. 2 - Problems 19 and 20 are based on the following...Ch. 2 - In the December 31, 2017, consolidated balance...Ch. 2 - Prob. 21PCh. 2 - The following book and fair values were available...Ch. 2 - Prob. 23PCh. 2 - Prob. 24PCh. 2 - Prob. 25PCh. 2 - Prob. 26PCh. 2 - Prob. 27PCh. 2 - Prob. 28PCh. 2 - Prob. 29PCh. 2 - Prob. 30PCh. 2 - Prob. 31PCh. 2 - SafeData Corporation has the following account...Ch. 2 - Prob. 33PCh. 2 - Prob. 34PCh. 2 - Prob. 35APACh. 2 - On February 1, Piscina Corporation completed a...Ch. 2 - Prob. 37APBCh. 2 - Prob. 38APBCh. 2 - Prob. 1DYSCh. 2 - Prob. 2DYSCh. 2 - Prob. 3DYSCh. 2 - Prob. 4DYS
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