HET purchased 80% of the 10,000 outstanding shares LNET had on Jan. 1, 2019 for $300,000 cash. On that day, LNET had 10,000 preferred shares, 4% cumulative, redeemable at a price which is $1 higher than the cost, and dividends were one year in arrears. HET did not own any o those preferred shares. Both companies have Dec. 31 as the reporting day. LNET reported the followings: Common shares: $180,000 on Jan 1, 2019 $40,000 on Jan 1, 2019 Retained earnings: $80,000 on Jan 1, 2019 $70,000 for 2019 Dividends declared: $6,000 on Dec 30, 2019 Preferred shares: Net income: Assume: the entity theory is used. 7) What is the total acquisition differential on Jan. 1, 2019?
HET purchased 80% of the 10,000 outstanding shares LNET had on Jan. 1, 2019 for $300,000 cash. On that day, LNET had 10,000 preferred shares, 4% cumulative, redeemable at a price which is $1 higher than the cost, and dividends were one year in arrears. HET did not own any o those preferred shares. Both companies have Dec. 31 as the reporting day. LNET reported the followings: Common shares: $180,000 on Jan 1, 2019 $40,000 on Jan 1, 2019 Retained earnings: $80,000 on Jan 1, 2019 $70,000 for 2019 Dividends declared: $6,000 on Dec 30, 2019 Preferred shares: Net income: Assume: the entity theory is used. 7) What is the total acquisition differential on Jan. 1, 2019?
Chapter6: Corporations: Redemptions And Liquidations
Section: Chapter Questions
Problem 46P
Related questions
Question
Transcribed Image Text:HET purchased 80% of the 10,000 outstanding shares LNET had on Jan. 1, 2019 for $300,000
cash. On that day, LNET had 10,000 preferred shares, 4% cumulative, redeemable at a price
which is $1 higher than the cost, and dividends were one year in arrears. HET did not own any of
those preferred shares. Both companies have Dec. 31 as the reporting day. LNET reported the
followings:
Common shares:
$180,000 on Jan 1, 2019
$40,000 on Jan 1, 2019
Retained earnings: $80,000 on Jan 1, 2019
$70,000 for 2019
Dividends declared: $6,000 on Dec 30, 2019
Preferred shares:
Net income:
Assume: the entity theory is used.
7) What is the total acquisition differential on Jan. 1, 2019?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning