On December 1, 2018, Ban Company exchanged 40,000 shares of its P10 par value ordinary shares held in treasury for a used machine. The treasury shares were acquired by Ban at a cost of P40 per share and are accounted for under the cost method. On the date of exchange, the ordinary shares had a fair value of P55 per share, but the shares were originally issued at P30 per share. What is the increase in equity as a result of the exchange? Group of answer choices A. 1,800,000 B. 1,600,000 C. 2,200,000 D. 600,000

On December 1, 2018, Ban Company exchanged 40,000 shares of its P10 par value ordinary shares held in treasury for a used machine. The treasury shares were acquired by Ban at a cost of P40 per share and are accounted for under the cost method. On the date of exchange, the ordinary shares had a fair value of P55 per share, but the shares were originally issued at P30 per share. What is the increase in equity as a result of the exchange? Group of answer choices A. 1,800,000 B. 1,600,000 C. 2,200,000 D. 600,000

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter15: Contributed Capital

Section: Chapter Questions

Problem 1MC

See similar textbooks

Similar questions

On September 1, 2019, Pelican Ltd exchanged 10,000 ordinary shares held in treasury for a used machine. The treasury shares were acquired by Pelican at a cost of P40 per share, and are accounted for under the cost method. On the date of the exchange, the ordinary shares had a fair value of P55 per share (the shares were originally issued at P30 per share). As a result of this exchange, Pelican's total equity will increase by P100,000. P400,000. P150,000. P550,000.
On December 1, 2019, PT ABC exchanged 20.000 shares of its Rp10 par value ordinary shares held in treasury for a used machine. The treasury shares were acquired by ABC at a cost of Rp40 per share, and are accounted for under the cost method. On the date of the exchange, the ordinary shares had a fair value of Rp55 per share (the shares were originally issued at Rp30 per share). As a result of this exchange, ABC’s total equity will increase by:
On 1 October 2018, KING acquired 30,000 of VAM's 100,000 shares in exchange for 75,000 of its own shares. The market value of KING's shares at the date of this share exchange was $3.20 per share. VAM's net profit for the financial year ended 31 March 2019 was $200,000. $40,000 of this profit was made by VAM from 1 April 2018 to 30 September 2018. VAM is the only associate of KING. What amount will be shown as 'investment in associate' in the consolidated statement of financial position of KING as at 31 March 2019? Please provide explaination. A) $288,000 B) $300,000 C) $156,000 D) $252,000 E) None of the above
Mimi Corporation started business in 2007 by issuing 200,000 shares of P20 par common stock for P36 each. In 2012, 30,000 of these shares were purchased for P52 per share by Mimi Corporation and held as treasury stock. On June 15, 2013, these 30,000 shares were exchanged for a piece of property that had an assessed value of P810,000. Mimi's stock is actively traded and had a market price of P60 on June 15, 2013. The cost method is used to account for treasury stock. The amount of paid-in capital from treasury stock transactions resulting from the above events would be:
On January 1, 2018, the Moody Company entered into a transaction for 100% of the outstanding common stock of Osorio Company. To acquire these shares, Moody issued $400 in long-term liabilities and also issued 40 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Moody paid $20 to lawyers, accountants, and brokers for assistance in bringing about this acquisition. Another $15 was paid in connection with stock issuance costs. Prior to these transactions, the balance sheets for the two companies were as follows: Moody Osorio Cash $ 180 $ 40 Receivables 810 180 Inventories 1,080 280 Land 600 360 Buildings (net) 1,260 440 Equipment (net) 480 100 Accounts payable (450 ) (80 ) Long-term liabilities (1,290 ) (400 ) Common stock ($1 par) (330 ) Common stock ($20 par) (240 ) Additional paid-in capital (1,080 ) (340 ) Retained…
On January 1, 2013, an investor purchases 15,000 common shares of an investee at $9 (cash) per share. The shares represent 20% ownership in the investee. The investee shares are not considered "marketable" because they do not trade on an active exchange. On January 1, 2013, the book value of the investee's assets and liabilities equals $600,000 and $150,000, respectively. On that date, the appraised fair values of the investee's identifiable net assets approximated the recorded book values. During the year ended December 31, 2013, the investee company reported net income equal to $22,500 and dividends equal to $12,000. Noncontrolling investment accounting (price equals book value)Assume the investor can exert significant influence over the investee. Determine the balance in the "Investment in Investee" account at December 31, 2013. $3,600 $137,100 $135,000 $690,750
Koreans Ltd owned 300,000 of Marley Ltd shares. On 31 December 2019, when Koreans' account Investment in Ordinary Shares of Marley Ltd had a carrying value of P5 per share, Koreans distributed these shares to its shareholders as a dividend. Koreans originally paid P8 for each share. Marley has 1,000,000 shares issued, which are traded on a shares exchange. The quoted market price for a Marley share was P7 on the declaration date and P9 on the distribution date. What would be the reduction in Koreans' shareholders' equity as a result of the above transactions? P1,200,000 P1,500,000 P2,400,000 P2,700,000
On July 1, 2020, Shrek Company exchanged 12,000 shares of its ordinary shares P10 par value held in treasury for a copyright owned by Donkey Company. The treasury shares were acquired in 2018 at a cost of P240,000. At the exchange date, Shrek's ordinary shares were quoted at P26 per share, and the copyright had a net carrying value of P270,000 in Donkey's books. How much should Shrek record the copyright? A.P270,000B.P312,000C.P240,000D.P120,000
ABC Company and XYZ Company have announced terms of an exchange agreement under which ABC will issue 10,000 shares of its P5 par value ordinary shares to acquire all of XYZ’s assets. ABC’s shares are trading at P28, and XYZ’s P10 par value shares are trading at P15. Historical cost and fair value statement of financial position data on January 1, 2021, are as follows: (see image below) Based on the information provided, a. what amount will be reported for Ordinary Share in the combined company’s statement of financial position immediately following the business combination? b.
ABC Company and XYZ Company have announced terms of an exchange agreement under which ABC will issue 10,000 shares of its P5 par value ordinary shares to acquire all of XYZ’s assets. ABC’s shares are trading at P28, and XYZ’s P10 par value shares are trading at P15. Historical cost and fair value statement of financial position data on January 1, 2021, are as follows: (see image below) Based on the information provided, what amount will be reported for Ordinary Share in the combined company’s statement of financial position immediately following the business combination? what amount will be reported for Shareholders’ Equity in the combined company’s statement of financial position immediately following the business combination?
ABC Company and XYZ Company have announced terms of an exchange agreement under which ABC will issue 10,000 shares of its P5 par value ordinary shares to acquire all of XYZ’s assets. ABC’s shares are trading at P28, and XYZ’s P10 par value shares are trading at P15. Historical cost and fair value statement of financial position data on January 1, 2021, are as follows: (see image below) Based on the information provided, what amount will be reported for Ordinary Share in the combined company’s statement of financial position immediately following the business combination?
ABC Company and XYZ Company have announced terms of an exchange agreement under which ABC will issue 10,000 shares of its P5 par value ordinary shares to acquire all of XYZ’s assets. ABC’s shares are trading at P28, and XYZ’s P10 par value shares are trading at P15. Historical cost and fair value statement of financial position data on January 1, 2021, are as follows: (see image below) Based on the information provided, what amount will be reported for Ordinary Share in the combined company’s statement of financial position immediately following the business combination? Using the same information, what amount will be reported for Shareholders’ Equity in the combined company’s statement of financial position immediately following the business combination?