Advanced Accounting
14th Edition
ISBN: 9781260247824
Author: Joe Ben Hoyle, Thomas F. Schaefer, Timothy S. Doupnik
Publisher: RENT MCG
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Chapter 2, Problem 24P
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You work for an accountancy firm. You have been asked to provide advice to clients about the following transactions:On 1 October 2022, Shikipisha, a listed company, purchased 90% of the ordinary shares of Allan. Allan, which ceased trading one week prior to the share purchase, owns a manufacturing facility comprising of land and buildings as well as related equipment.The fair value of the land and buildings is similar to the fair value of the equipment. The acquisition of Allan only gained legal approval on the basis that all employees who worked at the facility are retained. There are no other assets, including any inventories, or processes transferred as part of the sale.Shikipisha proposes to account for the purchase of Allan as a business combination.Required:Advise whether the proposed treatments of the above two transactions are in accordance with IFS Standards.
Mr. X acquires 200 shares of a company on cum-right basis for ? 60,000. He
subsequently receives an offer of right to acquire fresh shares in the company in the
proportion of 1:1 at ? 105 each. He does not subscribe but sells all the rights for
7 15,000. The market value of the shares after their becoming ex-rights has also gone
down to 7 50,000. What should be the accounting treatment in this case?
Use the following facts for Multiple Choice problems 28 and 29:
Assume on January 1, 2022, the investor company issued 10,000 new shares of the investor company's com-
mon stock in exchange for all of the individually identifiable assets and liabilities of the investee company.
The investee company qualifies as a business. Fair value approximates book value for all of the investee's
identifiable net assets. The transaction resulted in no goodwill or bargain purchase gain. The following
financial statement information is for an investor company and an investee company on January 1, 2022,
prepared immediately before this transaction.
Receivables & inventories
Land.
Property & equipment...
Total assets....
Liabilities...
Common stock ($1 par)
Additional paid-in capital.
Retained earnings.
Total liabilities & equity.
Net Assets
****
28. Asset acquisition (fair value equals book value)
What is the per share fair value of the investor's common stock?
. c. $42.00/share
d.
$58.80/share
a.…
Chapter 2 Solutions
Advanced Accounting
Ch. 2 - Prob. 1QCh. 2 - Describe the concept of a synergy. What are some...Ch. 2 - Prob. 3QCh. 2 - What does the term consolidated financial...Ch. 2 - Within the consolidation process, what is the...Ch. 2 - Prob. 6QCh. 2 - Prob. 7QCh. 2 - Prob. 8QCh. 2 - Prob. 9QCh. 2 - Prob. 10Q
Ch. 2 - Prob. 11QCh. 2 - Prob. 12QCh. 2 - Which of the following does not represent a...Ch. 2 - Prob. 2PCh. 2 - Prob. 3PCh. 2 - Prob. 4PCh. 2 - Prob. 5PCh. 2 - Prob. 6PCh. 2 - Prob. 7PCh. 2 - When does gain recognition accompany a business...Ch. 2 - Prob. 9PCh. 2 - Prob. 10PCh. 2 - Prob. 11PCh. 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. 14PCh. 2 - Prob. 15PCh. 2 - Prob. 16PCh. 2 - Prob. 17PCh. 2 - On its acquisition-date consolidated balance...Ch. 2 - On its acquisition-date consolidated balance...Ch. 2 - Prob. 20PCh. 2 - Prob. 21PCh. 2 - Prob. 22PCh. 2 - The following book and fair values were available...Ch. 2 - Prob. 24PCh. 2 - Prob. 25PCh. 2 - Prob. 26PCh. 2 - Prob. 27PCh. 2 - Prob. 28PCh. 2 - SafeData Corporation has the following account...Ch. 2 - Prob. 34PCh. 2 - Prob. 35PCh. 2 - Prob. 39APBCh. 2 - Prob. 40APB
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