Soft Bound Version for Advanced Accounting 13th Edition
13th Edition
ISBN: 9781260110579
Author: Hoyle
Publisher: McGraw Hill Education
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Textbook Question
Chapter 2, Problem 36APA
On February 1, Piscina Corporation completed a combination with Swimwear Company. At that date, Swimwear’s account balances were as follows:
| Book Values | Fair Values | |
| Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | $ 600,000 | $ 650,000 |
| Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 450,000 | 750,000 |
| Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 900,000 | 1,000,000 |
| Unpatented technology . . . . . . . . . . . . . . . . . . . . . . . . . . | –0– | 1,500,000 |
| Common stock ($10 par value) . . . . . . . . . . . . . . . . . . . . | (750,000) | |
| Retained earnings, 1/1 . . . . . . . . . . . . . . . . . . . . . . . . . . . | (1,100,000) | |
| Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | (600,000) | |
| Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 500,000 |
Piscina issued 30,000 shares of its common stock with a par value of $25 and a fair value of $150 per share to the owners of Swimwear for all of their Swimwear shares. Upon completion of the combination, Swimwear Company was formally dissolved.
Prior to 2002, business combinations were accounted for using either purchase or pooling of interests accounting. The two methods often produced substantially different financial statement effects. For the scenario above,
- a. What are the respective consolidated values for Swimwear’s assets under the pooling method and the purchase method?
- b. Under each of the following methods, how would Piscina account for Swimwear’s current year, but prior to acquisition, revenues and expenses?
- Pooling of interests method.
- Purchase method.
- c. Explain the alternative impact of pooling versus purchase accounting on performance ratios such as return on assets and earnings per share in periods subsequent to the combination.
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On May 1, Soriano Co. reported the following account balances along with their estimated fair values:
Carrying Amount Fair Value
Receivables . . . . . . . . . . . . . . . . . . . . . . . $ 90,000 $ 90,000
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . 75,000 75,000
Copyrights . . . . . . . . . . . . . . . . . . . . . . . . 125,000 480,000
Patented technology . . . . . . . . . . . . . . . 825,000 700,000
Total assets . . . . . . . . . . . . . . . . . . . . . . . $1,115,000 $1,345,000
Current liabilities . . . . . . . . . . . . . . . . . . . $ 160,000 $ 160,000
Long-term liabilities . . . . . . . . . . . . . . . . 645,000 635,000
Common stock . . . . . . . . . . . . . . . . . . . . 100,000
Retained earnings . . . . . . . . . . . . . . . . . . 210,000
Total liabilities and equities . . . . . . . . . . $1,115,000
On that day, Zambrano paid cash to acquire all of the assets and liabilities of Soriano, which will cease to exist as a separate entity. To facilitate the…
Following are data from the statements of two companies selling comparable products:Current Year-End Balance Sheets Nike Zing Company CompanyCash............................................................................................. 119.00 180.00Notes receivable ........................................................................... 77.00 32.00Accounts receivable, net ............................................................... 420.00 640.00Merchandise inventory ................................................................. 588.00 877.00Prepaid expenses…
Following are data from the statements of two companies selling comparable products:
Current Year-End Balance Sheets
SunCompany
ZengCompany
Cash.........................................................................................
119.00
180.00
Notes receivable.......................................................................
77.00
32.00
Accounts receivable, net...........................................................
420.00
640.00
Merchandise inventory..............................................................
588.00
877.00
Prepaid expenses......................................................................
16.00
55.00
Plant and equipment, net...........................................................
2,321.00
2,744.00
Total assets...............................................................................…
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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