Answered: Compute the balance of Buildings and…

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter1: The Role Of Accounting In Business

Section: Chapter Questions

Problem 1.4.5MBA: Return on assets The following data (in millions) were adapted from recent financial statements of...

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RR Records Inc. acquired all of DD Studios’ voting shares on January 1, 20x1, for P280,000. RR’s balance sheet immediately after the combination contained the following balances: (see image 1) DD’s balance sheet at acquisition contained the following balances: (see image 2) On the date of combination, the inventory held by DD had a fair value of P170,000, and its buildings and recording equipment had a value of P375, 000. Goodwill reported by DD resulted from a purchase of SS Enterprises in 20x1. SS was liquidated and its assets and liabilities were brought onto DD’s books.

Compute the balance of Buildings and Equipment, net to be reported in the consolidated balance sheet immediately after the acquisition.

Image 1
RR Records, Inc.
Balance Sheet
January 1, 20x4
P120,000 Accounts Payable
110,000 Taxes Payable
70,000 Notes Payable
350,000
280,000 Retained Earnings
P930.000
P 75,000
50,000
Cash and Receivables .
Inventory..
Land.
Buildings and Equipment (net).
Investment in DD stock..
300,000
400,000
Common Stock.
105,000
P930.000
Image 2+
DD Studios
Balance Sheet
January 1, 20x4
P 40,000 Accounts Payable
180,000 Notes Payable.
350,000 Common Stock.
30,000 Additional Paid- in Capital ..
P 90,000
250,000
Cash and Receivables.
Inventory ..
Buildings and Equipment (net).
Goodwill .
100,000
200,000
(40,000)
Retained Earnings.
P600.000
P600.000

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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