Answered: COMBINED CORPORATE ENTITIES AND…

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter8: Investing Activities

Section: Chapter Questions

Problem 22PC

See similar textbooks

Related questions

Question

Bronze Corporation agrees to acquire the net assets of Wall Corporation on January 1, 20X1. Wall has the following balance sheet on the date of acquisition: Wall Corporation Balance Sheet January 1, 20X1 Assets Liabilities and Equity Accounts receivable . . . . . . . . . $ 79,000 Current liabilities . . . . . . . . . . . . . . $145,000 Inventory . . . . . . . . . . . . . . . . . . 112,000 Bonds payable . . . . . . . . . . . . . . . 100,000 Other current assets . . . . . . . . . . 55,000 Common stock . . . . . . . . . . . . . . . . 200,000 Equipment (net) . . . . . . . . . . . . . 294,000 Paid-in capital in excess of par . . . 50,000 Trademark . . . . . . . . . . . . . . . . . 30,000 Retained earnings . . . . . . . . . . . . . 75,000 Total assets. . . . . . . . . . . . . . . $570,000 Total liabilities and equity . . . . . $570,000 An appraiser determines that in-process R&D exists and has an estimated value of $14,000. The appraisal indicates that the following assets have fair values that differ from their book values: Fair Value Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . $120,000 Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . 307,000 Trademark . . . . . . . . . . . . . . . . . . . . . . . . . . 27,000 Use value analysis to prepare the entry on the books of Bronze Corporation to acquire the net assets of Wall Corporation under each of the following purchase price scenarios: Required 40 Part 1 COMBINED CORPORATE ENTITIES AND CONSOLIDATIONS 1. Purchase price is $500,000. 2. Purchase price is $300,000.

Expert Solution