Chapter 2, Problem 36P

Illustration 1. Measuring Goodwill/Gain on Bargain PurchaseOn January 1, 2021, Amahan Co. acquired all of the assets and assumed all of the liabilities of Anak, Inc. As of this date, the carrying amounts and fair values of the assets and liabilities of Anak acquired by Amahan are shown below:    On the negotiation for the business combination, Amahan Co. incurred the followingtransaction costs: P25,000.00 for legal fees; P 75,000.00 for accounting fees and P 50,000.00 for consultancy fees. Case 2: Amahan Co. paid P1,000,000.00 cash as consideration for the assets and liabilities of Anak, Inc. 1. How much is the previously held equity interest in the acquiree?a. 0.00b. 150,000.00c. 310,000.00d. 500,000.00 2. .How much is the fair value of the net identifiable assets acquired?a. 1,965,000.00b. 1,315,000.00c. 1,310,000.00d. 1,190,000.00 3.How much is the goodwill (gain on bargain purchase) on the business combination?a. (465,000.00)b. 185,000.00c. (190,000.00)d. 310,000.00

Illustration 1. Measuring Goodwill/Gain on Bargain PurchaseOn January 1, 2021, Amahan Co. acquired all of the assets and assumed all of the liabilities of Anak, Inc. As of this date, the carrying amounts and fair values of the assets and liabilities of Anak acquired by Amahan are shown below:    On the negotiation for the business combination, Amahan Co. incurred the followingtransaction costs: P25,000.00 for legal fees; P 75,000.00 for accounting fees and P 50,000.00 for consultancy fees. 1. How much is the goodwill (gain on bargain purchase) on the businesscombination?a. (465,000.00)b. 185,000.00c. (190,000.00)d. 310,000.00

Libra Company is purchasing 100% of the  outstanding stock of Genall Company for $700,000. Genall has the following balance sheet on  the date of acquisition: (see attachment)Appraisals indicate that the following fair values for the assets and liabilities should be acknowledged: Accounts receivable . . . . . . . . . . . . . . . $300,000 Inventory . . . . . . . . . . . . . . . . . . . . . . . . 215,000 Property, plant, and equipment . . . . . . . 700,000 Computer software . . . . . . . . . . . . . . . . 130,000 Current liabilities . . . . . . . . . . . . . . . . . . 250,000 Bonds payable . . . . . . . . . . . . . . . . . . . 210,000 1. Prepare the value analysis schedule and the determination and distribution of excess schedule. 2. Prepare the elimination entries that would be made on a consolidated worksheet prepared on the date of purchase.

On May 1, 2021, Jazzie Co. agreed to sell the assets of its Mister Division to Shawna Inc. for $80 million. The sale was completed on December 31, 2021.  Jazzie’s year ends on December 31st.  The following additional facts pertain to the transaction: The Mister Division qualifies as a component of an entity as defined by GAAP. Mister's net assets totaled $48 million on Jazzie's books at the time of the sale. Mister incurred a pre-tax operating loss of $10 million in 2021. Jazzie’s income tax rate is 40%.   Suppose that the Mister Division's assets had not been sold by December 31, 2021, but were considered held for sale. Assume that the fair value of these assets at December 31 was $80 million. In their 2021 income statement, Jazzie Co. would report for discontinued operations: Group of answer choices a $6 million after tax loss. a $10 million after tax loss after tax income of $13.2 million. after tax income of $22 million.

The following are several figures reported for Allister and Barone as of December 31, 2021:   AllisterBaroneInventory$400,000$200,000Sales 800,000 600,000Investment incomenot given  Cost of goods sold 400,000 300,000Operating expenses 180,000 250,000   Allister acquired 70 percent of Barone in January 2020. In allocating the newly acquired subsidiary's fair value at the acquisition date, Allister noted that Barone had developed a customer list worth $65,000 that was unrecorded on its accounting records and had a five-year remaining life. Any remaining excess fair value over Barone's book value was attributed to goodwill. During 2021, Barone sells inventory costing $120,000 to Allister for $160,000. Of this amount, 20 percent remains unsold in Allister's warehouse at year-end.   Determine balances for the following items that would appear on Allister's consolidated financial statements for 2021:

On May 1, 2021, Jazzie Co. agreed to sell the assets of its Mister Division to Shawna Inc. for $80 million. The sale was completed on December 31, 2021.  Jazzie’s year ends on December 31st.  The following additional facts pertain to the transaction: The Mister Division qualifies as a component of an entity as defined by GAAP. Mister's net assets totaled $48 million on Jazzie's books at the time of the sale. Mister incurred a pre-tax operating loss of $10 million in 2021. Jazzie’s income tax rate is 40%.   Suppose that the Mister Division's assets had not been sold by December 31, 2021, but were considered held for sale. Assume that the fair value of these assets at December 31 was $40 million. In their 2021 income statement, Jazzie Co. would report for discontinued operations: Group of answer choices a $6 million after tax loss. a $10 million after tax loss. a $10.8 million after tax loss. an $18 million after tax loss.

On June 30, 2021, Plaster, Inc., paid $988,000 for 80 percent of Stucco Company's outstanding stock. Plaster assessed the acquisition-date fair value of the 20 percent noncontrolling interest at $247,000. At acquisition date, Stucco reported the following book values for its assets and liabilities: Cash Accounts receivable Inventory Land Buildings Equipment Accounts payable (Parentheses indicate credit balances.) On June 30, Plaster allocated the excess acquisition-date fair value over book value to Stucco's assets as follows: $ 64,500 136,900 Equipment (3-year remaining life) Database (10-year remaining life) Cash Accounts receivable (net) Inventory Land Buildings (net) Equipment (net) Database 219, 200 70,400 189,400 324,300 (37,700) At the end of 2021, the following comparative (2020 and 2021) balance sheets and consolidated income statement were available: Plaster, Inc. December 31, 2020 Total assets Accounts payable Long-term liabilities Common stock Noncontrolling interest…

On January 1, 2021, Casey Corporation exchanged $3,327,000 cash for 100 percent of the outstanding voting stock of Kennedy Corporation. Casey plans to maintain Kennedy as a wholly owned subsidiary with separate legal status and accounting information systems. At the acquisition date, Casey prepared the following fair-value allocation schedule: Fair value of Kennedy (consideration transferred) Carrying amount acquired Excess fair value to buildings (undervalued) to licensing agreements (overvalued) to goodwill (indefinite life) Accounts Cash Accounts receivable Inventory Investment in Kennedy Buildings (net) Licensing agreements Goodwill Total assets Accounts payable Long-term debt Common stock Immediately after closing the transaction, Casey and Kennedy prepared the following postacquisition balance sheets from their separate financial records (credit balances in parentheses). Additional paid-in capital Retained earnings Total liabilities and equities Cash Accounts receivable Inventory…

On June 30, 2021, Plaster, Inc., paid $900,000 for 80 percent of Stucco Company's outstanding stock. Plaster assessed the acquisition-date fair value of the 20 percent noncontrolling interest at $225,000. At acquisition date, Stucco reported the following book values for its assets and liabilities: Cash 58,800 Accounts receivable 124,800 Inventory 199,800 Land 64,200 Buildings 172,700 Equiptment 295,700 Accounts Payable (34,400)   On June 30, Plaster allocated the excess acquisition-date fair value over book value to Stucco's assets as follows: Equiptment (3- year remaining life) 73,400 Database (10-year remaining life) 170,000 At the end of 2021, the following comparative (2020 and 2021) balance sheets and consolidated income statement were available: *See attachment* Additional information for 2021 On December 1, Stucco paid a $49,600 dividend. During the year, Plaster paid $84,000 in dividends. During the year, Plaster issued $769,420 in long-term…