Advanced Financial Accounting
11th Edition
ISBN: 9780078025877
Author: Theodore E. Christensen, David M Cottrell, Cassy JH Budd Advanced Financial Accounting
Publisher: McGraw-Hill Education
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Chapter 7, Problem 7.1.1E
To determine
Concept Introduction:
The intercompany transactions occur when the unit of legal entity is having transactions with another unit of the similar entity. This transaction can be divided into two categories such as direct and indirect intercompany transfer. The direct transfer occurs when there is transfer between the different units of the same entity and indirect transfer occurs when the unit of entity acquires debt or assets issued to unrelated entity through another unit of the same entity. This type of transfer will help the entity in improving the flow of finance and asset in efficient manner.
:
The carrying amount of equipment to be recorded in consolidated balance sheet.
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If PROMDI Co., a new company would acquire the net assets of CARDO Co and SYANO Co. PROMDI Co will be issuing 30,000 shares to CARDO and 12,000 shares to SYANO. The following is the balance sheet of PROMDI Co, followed by the fair values and additional unpaid costs incurred by PROMDI in the acquisition:
REQUIREMENTS:A. GoodwillB. Consolidated Total Assets at the date of acquisitionC. Consolidated Total Liabilities at the date of acquisitionD. Consolidated Equity at the date of acquisition
Box Company (the transferor company) and Cox Company (the transferee company) amalgamate
in an exchange of stock to form Cox & Box Company. The pre-amalgamation balance sheets
of Cox Company and Box Company are as follows:
1.
Вох Сompany
Сох Соmpany
* in million)
(® in million)
Fixed assets
25
10.0
Current assets
20
7.5
Total assets
Share capital (? 10 face value)
Reserves and surplus
Debt
45
17.5
20
5
10
10
15
2.5
45
17.5
For each share held in Box Company, two shares of Cox Company were given in exchange
(face value: 710, share premium: 720) as the market price of Cox's equity shares is 730. The
fair market value of the fixed assets and current assets of Box Company was assessed at ?20
million and 710 million, respectively. Prepare the post-amalgamation balance sheet of Cox &
Box Company under the 'pooling' and 'purchase' methods.
000
On January 31, 2022, Parent Company purchased all the identifiable net assets of Sub Company by transferring cash of P1,200,000 and issuing 100,000 shares with
par value of P20 and fair value of P32. Parent will pay additional amount depending on the net income achieved by Sub at year-end:
Net Income @ year-end
50,000,000
Consideration to be transferred
1,000,000
2,000,000
3,000,000
Case
1
75,000,000
100,000,000
Book value of Parent and Sub at the date of acquisition were as follows:
Parent
1,000,000
1,600,000
2,400,000
Sub
800,000
1,400,000
800,000
Cash
Accounts receivable
Inventory
Buildings
5.000,000
10,000,000
2,800,000
5,800,000
1,000,000
1,200,000
800,000
Total assets
Accounts payable
Common stock, P2 par
Share premium
Retained earnings
Total liabilities and equities
2,400,000
2,000,000
1,600,000
4,000,000
10,000,000
2,800,000
5,800,000
At the date of acquisition, Parent assessed that Sub will reach at least 60,000,000 of net income for 2022. Book value of the identifiable net…
Chapter 7 Solutions
Advanced Financial Accounting
Ch. 7 - Prob. 7.1QCh. 7 - Prob. 7.2QCh. 7 - Prob. 7.3QCh. 7 - Prob. 7.4QCh. 7 - Prob. 7.5QCh. 7 - Prob. 7.6QCh. 7 - Prob. 7.7QCh. 7 - Prob. 7.8QCh. 7 - Prob. 7.9QCh. 7 - Prob. 7.10Q
Ch. 7 - Prob. 7.11QCh. 7 - Prob. 7.12QCh. 7 - Prob. 7.13QCh. 7 - Prob. 7.14QCh. 7 - Prob. 7.15QCh. 7 - Prob. 7.16QCh. 7 - Prob. 7.17QCh. 7 - Prob. 7.18AQCh. 7 - Prob. 7.1CCh. 7 - Prob. 7.2CCh. 7 - Prob. 7.3CCh. 7 - Prob. 7.4CCh. 7 - Prob. 7.5CCh. 7 - Prob. 7.1.1ECh. 7 - Prob. 7.1.2ECh. 7 - Prob. 7.1.3ECh. 7 - Prob. 7.1.4ECh. 7 - Prob. 7.1.5ECh. 7 - Prob. 7.2.1ECh. 7 - Prob. 7.2.2ECh. 7 - Prob. 7.2.3ECh. 7 - Prob. 7.2.4ECh. 7 - Prob. 7.2.5ECh. 7 - Prob. 7.2.6ECh. 7 - Prob. 7.3ECh. 7 - Prob. 7.4ECh. 7 - Prob. 7.5ECh. 7 - Prob. 7.6ECh. 7 - Prob. 7.7ECh. 7 - Prob. 7.8ECh. 7 - Prob. 7.9ECh. 7 - Prob. 7.10ECh. 7 - Prob. 7.11ECh. 7 - Prob. 7.12ECh. 7 - Prob. 7.13ECh. 7 - Prob. 7.14ECh. 7 - Prob. 7.15ECh. 7 - Prob. 7.16ECh. 7 - Prob. 7.17ECh. 7 - Prob. 7.18ECh. 7 - Prob. 7.19ECh. 7 - Prob. 7.20ECh. 7 - Prob. 7.21ECh. 7 - Prob. 7.22ECh. 7 - Prob. 7.23AECh. 7 - Computation of Consolidated Net Income Petime...Ch. 7 - Prob. 7.25PCh. 7 - Prob. 7.26PCh. 7 - Prob. 7.27PCh. 7 - Prob. 7.28.1PCh. 7 - Prob. 7.28.2PCh. 7 - Prob. 7.28.3PCh. 7 - Prob. 7.28.4PCh. 7 - Prob. 7.29PCh. 7 - Prob. 7.30PCh. 7 - Prob. 7.31PCh. 7 - Prob. 7.32PCh. 7 - Prob. 7.33PCh. 7 - Prob. 7.34PCh. 7 - Prob. 7.35PCh. 7 - Prob. 7.36PCh. 7 - Prob. 7.37PCh. 7 - Prob. 7.38PCh. 7 - Prob. 7.39APCh. 7 - Prob. 7.40APCh. 7 - Modified Equity Method Using the data in P7-33, on...Ch. 7 - Prob. 7.42AP
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