Advanced Accounting
14th Edition
ISBN: 9781260247824
Author: Joe Ben Hoyle, Thomas F. Schaefer, Timothy S. Doupnik
Publisher: RENT MCG
expand_more
expand_more
format_list_bulleted
Question
error_outline
This textbook solution is under construction.
Students have asked these similar questions
Allerton Company acquires all of Deluxe Company’s assets and liabilities for cash on January 1, 2018, and subsequently formally dissolves Deluxe. At the acquisition date, the following book and fair values were available for the Deluxe Company accounts:Prepare Allerton’s entry to record its acquisition of Deluxe in its accounting records assuming the following cash exchange amounts:1. $145,000.2. $110,000.
Allerton Company acquires all of Deluxe Company's assets and liabilities for cash on January 1, 2024, and subsequently formally
dissolves Deluxe. At the acquisition date, the following book and fair values were available for the Deluxe Company accounts:
Items
Current assets
Building
Land
Trademark
Goodwill
Liabilities
Common stock
Retained earnings
View transaction list
Required:
a. and b. Prepare Allerton's journal entry to record its acquisition of Deluxe in its accounting records assuming the following cash
exchange amounts: $157,000 and $92,000.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
Journal entry worksheet
Next >
Allerton Company acquires all of Deluxe Company’s assets and liabilities for cash on January 1, 2021, and subsequently formally dissolves Deluxe. At the acquisition date, the following book and fair values were available for the Deluxe Company accounts:
BookValues
FairValues
Current assets
$
53,500
$
53,500
Building
93,750
47,750
Land
24,250
41,250
Trademark
0
39,300
Goodwill
20,000
?
Liabilities
(56,500
)
(56,500
)
Common stock
(100,000
)
Retained earnings
(35,000
)
1&2. Prepare Allerton’s entry to record its acquisition of Deluxe in its accounting records assuming the following cash exchange amounts: $167,000 and $104,500. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Record the acquisition of Delex assuming the cash exchange of $167,000.
Record the acquisition of Delex assuming the cash exchange of $104,500.
Knowledge Booster
Similar questions
- Puncho Company is acquiring the net assets of Semos Company in exchange for common stock valued at $900,000. The Semos identifiable net assets have book and fair values of $400,000 and $800,000, respectively. Compare accounting for the acquisition (including assignment of the price paid) by Puncho with accounting for the sale by Semos.arrow_forwardAllerton Company acquires all of Deluxe Company’s assets and liabilities for cash on January 1, 2021, and subsequently formally dissolves Deluxe. At the acquisition date, the following book and fair values were available for the Deluxe Company accounts: BookValues FairValues Current assets $ 55,250 $ 55,250 Building 105,500 61,900 Land 18,750 35,350 Trademark 0 37,400 Goodwill 20,000 ? Liabilities (64,500 ) (64,500 ) Common stock (100,000 ) Retained earnings (35,000 ) 1&2. Prepare Allerton’s entry to record its acquisition of Deluxe in its accounting records assuming the following cash exchange amounts: $170,000 and $108,000. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)arrow_forwardOn July 1, 2021, PASSETS acquired all the net assets of SIABS at its underlying book value, which resulted to neither a gain nor a goodwill. Considerations transferred included cash paid, bonds issued, and stocks issued. Apart from the transaction to acquire the net assets of and to transfer the consideration to the acquiree, PASSETS also has the following transactions: PASSETS paid P150,000 to SEC to register the newly issued shares PASSETS incurred the obligation to pay P50,000 for printing of the stock certificates of the new shares issued. PASSETS paid Mr. Louis McRasigan P100,000 cash for his professional services in administering the business combination A total of P1,000,000 for general and administrative expenses were incurred by the company, half of which was attributable to the business combination and treated as an unpaid indirect cost. Among the four related transactions above, how much will decrease assets of the acquirer? 200,000 250,000 1,300,000 800,000arrow_forward
- On July 1, 2021, PASSETS acquired all the net assets of SIABS at its underlying book value, which resulted to neither a gain nor a goodwill. Considerations transferred included cash paid, bonds issued, and stocks issued. Apart from the transaction to acquire the net assets of and to transfer the consideration to the acquiree, PASSETS also has the following transactions: PASSETS paid P150,000 to SEC to register the newly issued shares PASSETS incurred the obligation to pay P50,000 for printing of the stock certificates of the new shares issued. PASSETS paid Mr. Louis McRasigan P100,000 cash for his professional services in administering the business combination A total of P1,000,000 for general and administrative expenses were incurred by the company, half of which was attributable to the business combination and treated as an unpaid indirect cost. a. 200,000 b. 1,300,000 c. 250,000 d. 800,000 Among the four related transactions above, how much will decrease assets of the acquirer?arrow_forwardOn January 17, Lina's Co. Paid $1,600,000 for all the issued and outstanding common stock of Ralph Inc. In a transaction properly accounted for as an acquisition. The book values and fair values of Ralph's assets and liabilities on January 17, were as follows : Book Value Fair Value S 160,000 180,000 $160,000 180,000 Cash Receivables (net) 300,000 920,000 Inventory Plant and equipment (net) Liabilities 315,000 820,000 (350.000) (350) S1,210,000 Net assets S1,125,000 What is the amount of Goodwill resulting from the business combination?arrow_forwardOn January 1, 2021, P Corporation purchases from an unrelated person all the outstanding stock of S Corporation for $90,000. S’s balance sheet on the purchase date is as follows: Assets Basis Fair Market Value Cash $ 5,000 $ 5,000 Accounts Receivable 20,000 20,000 Inventory (LIFO) 20,000 40,000 Equipment (accumulated depreciation of $10,000) 30,000 45,000 Total Assets $75,000 $110,000 Liabilities Accounts payable $20,000 $ 20,000 Equity 55,000 90,000 Total liabilities and equity $75,000 $110,000 P properly elects § 338. S’s tax rate is 21 percent. a. What is the aggregate basis of S’s assets after this transaction? b. What is the basis for each individual asset?arrow_forward
- On January 1, 2021, P Corporation purchases from an unrelated person all the outstanding stock of S Corporation for $90,000. S's balance sheet on the purchase date is as follows: Basis Fair Market Value Assets Cash $ 5,000 $ 5,000 Accounts Receivable 20,000 20,000 Inventory (LIFO) 20,000 40,000 Equipment (accumulated depreciation of $10,000) 30,000 45,000 Total Assets $75,000 $110,000 Liabilities Accounts payable $20,000 $ 20,000 Equity 55,000 90,000 Total liabilities and equity $75,000 $110,000 P properly elects § 338. S's tax rate is 21 percent. a. What is the aggregate basis of S's assets after this transaction? b. What is the basis for each individual asset?arrow_forwardPeter Corporation purchased the net assets of Salim, Inc. on January 2, 2020 for $380,000 cash and also paid legal fees associated with acquisition of Salim of $15,000. Issuance expenses were $10,000. Salim, Inc. was dissolved on the date of the acquisition. Salim's balance sheet on January 2, 2020 was as follows: $90,000 220,000 30,000 20,000 40,000 $400,000 $75,000 90,000 10,000 205,000 20,000 $400,000 Accounts receivable-net Current liabilities Long term debt Common stock ($1 par) Addtl. paid-in capital Retained earnings Total liab. & equity Inventory Land Building-net Equipment-net Total assets Fair values agree with book values except for inventory, land, and equipment, which have fair values of $260,000, $35,000 and $35,000, respectively. Salim has patent rights with a fair value of $20,000. Required: Prepare Peter's general journal entry for the cash purchase of Salim's net assets.arrow_forwardS acquired 100 percent of F for P275,000. At the date of acquisition, F had the following book and market values: (see image below) What is the amount of the “Investment in F” account on S’s financial records at the acquisition date? What amount of pre-acquisition earnings is eliminated in the acquisition date worksheet elimination? Please answer in good accounting form. Thank you!arrow_forward
- Adams, Incorporated, acquires Clay Corporation on January 1, 2023, in exchange for $550,400 cash. Immediately after the acquisition, the two companies have the following account balances. Clay’s equipment (with a five-year remaining life) is actually worth $537,600. Credit balances are indicated by parentheses. Items Adams Clay Current assets $ 480,000 $ 236,000 Investment in Clay 550,400 0 Equipment 713,600 462,000 Liabilities (261,000) (232,000) Common stock (350,000) (150,000) Retained earnings, 1/1/23 (1,133,000) (316,000) In 2023, Clay earns a net income of $50,400 and declares and pays a $5,000 cash dividend. In 2023, Adams reports net income from its own operations (exclusive of any income from Clay) of $201,000 and declares no dividends. At the end of 2024, selected account balances for the two companies are as follows: Items Adams Clay Revenues $ (508,000) $ (360,000) Expenses 368,300 270,000 Investment income Not given 0 Retained earnings,…arrow_forwardOn January 1, 2023, Tamarisk Company issued 1,450 of its $20 par value common shares with a fair value of $60 per share in exchange for the 2,000 outstanding common shares of Sheffield Company in a purchase transaction. Registration costs amounted to $2,500, paid in cash. Just prior to the acquisition, the balance sheets of the two companies were as follows: Cash Accounts receivable (net) Inventory Plant and equipment (net) Land Total assets Accounts payable Notes payable Common stock, $20 par value Other contributed capital Retained earnings Total equities Tamarisk Company $83,000 103,000 56,000 95,000 23,500 $360,500 $63,000 89,500 100,000 60,000 48,000 $360,500 Sheffield Company $12,600 18,000 25,000 46,500 22,000 $124,100 $19,500 30,000 40,000 27,500 7,100 $124,100 Any difference between the book value of equity and the value implied by the purchase price relates to goodwill.arrow_forwardHalwell Motor Company acquires all of the stock of Ornex Auto Services for $60,000,000 in cash. The books of Ornex report the following account balances at the date of acquisition (in trial balance format). Date-of-acquisition fair values are also displayed. Current assets Property, net Liabilities Capital stock Retained earnings Total Book Value Dr (Cr) $1,000,000 Fair Value Dr (Cr) $650,000 59,000,000 40,000,000 (35,000,000) $(36,000,000) (10,000,000) (15,000,000) $- Omex has no previously unrecorded identifiable intangibles On the consolidation working paper, eliminating entry (R) Select one: O a debits goodwill by $55,350,000 O b. credits Investment in Ornex by $25,000,000 O O c. debits capital stock by $10,000,000 d. debits current assets by $350,000arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Auditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage LearningIntermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Auditing: A Risk Based-Approach (MindTap Course L...
Accounting
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning