On January 1, 2013, ABC Corporation spent $2,600,000 to acquire control over XYZ, Inc. This price was based on paying $750,000 for 30 percent of XYZ's preferred stock, and $1,850,000 for 80 percent of its outstanding common stock. As of the date of the acquisition, XYZ's stockholders' equity accounts were as follows: Common stock (10 par value) $1,000,000 Preferred stock (7% fully participating, $100 par value) $1,000,000 Retained earnings $2,000,000 Required: 1) What is the total acquisition-date fair value of XYZ? 2) Assuming all accounts XYZ are correctly valued within the company's financial statements, what amount of goodwill should be recognized for the Investment in XYZ?

On January 1, 2013, ABC Corporation spent $2,600,000 to acquire control over XYZ, Inc. This price was based on paying $750,000 for 30 percent of XYZ's preferred stock, and $1,850,000 for 80 percent of its outstanding common stock. As of the date of the acquisition, XYZ's stockholders' equity accounts were as follows: Common stock (10 par value) $1,000,000 Preferred stock (7% fully participating, $100 par value) $1,000,000 Retained earnings $2,000,000 Required: 1) What is the total acquisition-date fair value of XYZ? 2) Assuming all accounts XYZ are correctly valued within the company's financial statements, what amount of goodwill should be recognized for the Investment in XYZ?

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 2MC: Cary Corporation has 50,000 shares of 10 par common stock authorized. The following transactions...

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The investments of Steelers Inc. include a single investment: 33,100 shares of Bengals Inc. common stock purchased on September 12, 2016, for 13 per share including brokerage commission. These shares were classified as available-for-sale securities. As of the December 31, 2016, balance sheet date, the share price declined to 11 per share. a. Journalize the entries to acquire the investment on September 12 and record the adjustment to fair value on December 31, 2016. b. How is the unrealized gain or loss for available-for-sale investments disclosed on the financial statements?
Ponce Towers, Inc., had 50,000 shares of common stock and 10,000 shares of 100 par value, 8% preferred stock outstanding on January 1, 2011. Each share of preferred stock is convertible into four shares of common stock. The stock has not been converted. During the year, Ponce Towers issued additional shares of common stock as follows: For 2011, Ponce Towers, Inc., had income from continuing operations of 545,000 and a 72,000 loss from discontinued operations (net of tax). Open the file EPS from the website for this book at cengagebrain.com. Enter all input items (AF) in the appropriate cells in the Data Section. Enter all formulas in the appropriate cells in the Answer Section. Enter your name in cell A1. Save the completed file as EPS2. Print the worksheet when done. Also print your formulas. Check figure: Basic earnings per share from continuing operations (cell D29), 5.94.
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Cary Corporation has 50,000 shares of 10 par common stock authorized. The following transactions took place during 2019, the first year of the corporations existence: Sold 5,000 shares of common stock for 18 per share. Issued 5,000 shares of common stock in exchange for a patent valued at 100,000. At the end of Carys first year, total contributed capital amounted to: a. 40,000 b. 90,000 c. 100,000 d. 190,000