Advanced Accounting
14th Edition
ISBN: 9781260247824
Author: Joe Ben Hoyle, Thomas F. Schaefer, Timothy S. Doupnik
Publisher: RENT MCG
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Question
Chapter 3, Problem 2Q
To determine
Describe the values that should be included in consolidated totals:
a. Equipment
b. Investment in Williams Company
c. Dividends Declared
d.
e. Revenues
f. Expenses
g. Common Stock
h. Net Income
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Students have asked these similar questions
On January 1, 2024, Presidio Company acquired 100 percent of the outstanding common stock of Mason Company. To
acquire these shares, Presidio Issued to the owners of Mason $329,000 in long-term liabilities and 20,000 shares of
common stock having a par value of $1 per share but a fair value of $10 per share. Presidio paid $32,500 to
accountants, lawyers, and brokers for assistance in the acquisition and another $17,000 in connection with stock
Issuance costs.
Prior to these transactions, the balance sheets for the two companies were as follows:
Cash
Presidio
Company
Mason
Company
$ 36,200
Items
$ 81,900
Receivables
290,000
151,000
Inventory
378,000
178,000
Land
284,000
272,000
Buildings (net)
469,000
280,000
Equipment (net)
194,000
71,100
Accounts payable
(179,000)
(47,700)
Long-term
liabilities
Common stock-$1 par
value
Common stock-$20 par
value
Additional paid-in
capital
Retained earnings,
1/1/24
(462,000) (329,000)
(110,000)
в
0 (120,000)
(360,000)
(585,900) (491,600)
Note:…
odwill to be amortized periodically for 20 years. G. Goodwill to be amortized for 40 years
D. Expenses immediately.
B. Goodwill not subject to amortization but subject to impairment.
3. Two methods of arranging business combinations:
C. Acquisition and uniting of interest
D. Merger and acquisition of stocks
A/ Merger and consolidation
B. Consolidation and Acquisition of stocks
. The cost of registering equity securities in a business combination should be recorded as:
A. An income of the period
B. An expense of the period
C. Deduction from additional paid-in capital
D. Part of the cost of the stock acquired
5. In acquisition-type combination, the appropriate accounting for the excess of fair values of net assets acquired
er the price paid is to:
A. Recognize as income in the books of the acquirer
B. Recognize as additional paid-in capital in the books of the acquirer
blbe C. Reduce proportionately current fair values assigned to the acquiree's non-current assets any
remaining excess as…
Asset acquisition vs. stock acquisition (fair value is different from book value)
The following financial statement information is for an investor company and an investee company on January 1, 2013. On January 1, 2013, the investor company's common stock had a traded market value of $17.5 per share, and the
investee company's common stock had a traded market value of $15.5 per share.
Book Values
Fair Values
Investor Investee Investor Investee
Receivables & inventories $50,000 $25,000 $45,000 $22,500
100.000 50,000 150,000 75.000
112,500 50,000 125,000 65,000
75.000 40,000
$262,500 $125,000 $395,000 $202,500
$75,000 $40,000 $90,000 $47,500
10.000 5,000
140,000
75,000
37.500
5,000
$262,500 $125,000
$187,500 $85,000 $305,000 $155,000
Land
Property & equipment
Trademarks & patents
Total assets
Liabilities
Common stock ($1 par)
Additional paid-in capital
Retained earnings
Total liabilities & equity
Net assets
Required (Parts a. and b. are independent of each other.)
Chapter 3 Solutions
Advanced Accounting
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