docs.google.com aIncrease in retained earningsP Company acquired the net assets ofS Company of fair value of $2700,000on January 1, 2011, paying $2.600,000cash, P Company agreed to pay SCompany's former stockholders$300,000 cash in 2012 if post-combination earnings of the combinedcompany reached $1,000,000 during2011. The acquisition entry will include:Gain on acquisition of $200,000Liability for Contingent Considerationof $200,000Goodwill of $200,000None of the answersP Corporation issued 10,000 shares of

Goodwill is recorded ad an asset when there is the purchase of another business. Often the purchase…

Answered: Company acquired the net assets of…

Business

Accounting

Company acquired the net assets of Company of fair value of $2,700,000

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter14: Intercorporate Investments In Common Stock

Section: Chapter Questions

Problem 28P

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docs.google.com a
Increase in retained earnings
P Company acquired the net assets of
S Company of fair value of $2700,000
on January 1, 2011, paying $2.600,000
cash, P Company agreed to pay S
Company's former stockholders
$300,000 cash in 2012 if post-
combination earnings of the combined
company reached $1,000,000 during
2011. The acquisition entry will include:
Gain on acquisition of $200,000
Liability for Contingent Consideration
of $200,000
Goodwill of $200,000
None of the answers
P Corporation issued 10,000 shares of

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Hamilton Companys balance sheet on January 1, 2019, was as follows: Korbel Company is considering purchasing Hamilton (a privately held company) and discovers the following about Hamilton: a. No allowance for doubtful accounts has been established. A 10,000 allowance is considered appropriate. b. Marketable securities are valued at cost. The current market value is 60,000. c. The LIFO inventory method is used. The FIFO inventory of 140,000 would be used if the company is acquired. d. Land, included in property, plant, and equipment, which is recorded at its cost of 50,000, is worth 120,000. The remaining property, plant, and equipment is worth 10% more than its depreciated cost. e. The company has an unrecorded trademark that is worth 70,000. f. The companys bonds are currently trading for 130,000. g. The pension liability is understated by 40,000. Required: 1. Compute the amount of goodwill if Korbel agrees to pay 500,000 cash for Hamilton. 2. Next Level What are the reasons that the book value of Hamiltons net identifiable assets differ from their market value? 3. Prepare the journal entry to record the acquisition on the books of Korbel assuming Hamilton is liquidated. 4. If Korbel agrees to pay only 400,000 cash, how much goodwill exists? 5. If Korbel pays only 400,000 cash, prepare the journal entry to record the acquisition on its books, assuming Hamilton is liquidated.
(TCO C) Smith Inc. acquired all of the common stock that was outstanding of Williams Company on 1/1/15. As a result of this acquisition, there will be annual amortization in the amount of $30,000. Smith reported a retained earnings balance of $400,000, and Williams reported a retained earnings balance of $100,000 on the date of acquisition. In addition, Smith had net income for 2015 in the amount of $75,000 and net income for 2016 in the amount of $70,000. Smith also paid dividends in the amount of $20,000 both in 2015 and 2016. Williams had net income for 2015 in the amount of $25,000 and net income for 2016 in the amount of $30,000. In addition, Williams paid dividends in the amount of $5,000 both in 2015 and 2016. Assume that Smith includes the Equity in Subsidiary income in their reported net income. If Smith uses the partial equity method for net income, what are the consolidated retained earnings on 12/31/16?
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