Please do not give solution in image format thanku On January 1, 2016, Prima Company issued 1,500 of its$20 par value common shares with a fair value of $50per share in exchange for 2,000 outstanding commonshares of Swatch Company in a purchase transaction.Registration costs amounted to $1,700 paid in cash.Just prior to the acquisition, the balance sheets of thetwo companies were as follows:CashAccounts Receivable (net)InventoryPlant and Equipment (net)LandTotal AssetsAccounts PayableNotes PayableCommon Stock, $20 parvalueOther Contributed CapitalRetained EarningsTotal Liabilities andEquitiesPrima95,00058,00095,000CashLand26,00060,00039,000$ 73,000$ 347,000$ 66,00082,000100,000$ 347,000Swatch$13,00019,00025,000Common StockOther Contributed Capital43,00020,000$ 120,00016,00021,00040,00024,00019,000Any differences between the book value of equity andthe value implied by the purchase price relates to Land.Required:$ 120,000Prepare the journal entry on Prima's books to recordthe exchange of stock.Prepare a Computation and Allocation Schedule forthe Difference between book value and value impliedby the purchase price.Calculate the consolidated balance for each of thefollowing accounts as of December 31, 2016:

1) Journal entry on Prima's Books Date Account title Debit ($) Credit ($) 01.01.2016…

Answered: On January 1, 2016, Prima Company…

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

Chapter12: Intangibles

Section: Chapter Questions

Problem 18E

See similar textbooks

Similar questions

Parilo Company acquired 170,000 of Makofske Co., 5% bonds on May 1, 2016, at their face amount. Interest is paid semiannually on May 1 and November 1. On November 1, 2016, Parilo Company sold 50,000 of the bonds for 96. Journalize entries to record the following: a. The initial acquisition of the bonds on May 1. b. The semiannual interest received on November 1. c. The sale of the bonds on November 1. d. The accrual of 1,000 interest on December 31, 2016.
On January 1, 2016, Prima Company issued 1,500 of its $20 par value common shares with a fair value of $50 per share in exchange for 2,000 outstanding common shares of Swatch Company in a purchase transaction. Registration costs amounted to $1,700 paid in cash. Just prior to the acquisition, the balance sheets of the two companies were as follows: Prima Swatch Cash $ 73,000 $13,000 Accounts Receivable (net) 95,000 19,000 Inventory 58,000 25,000 Plant and Equipment (net) 95,000 43,000 Land 26,000 20,000 Total Assets $ 347,000 $ 120,000 Accounts Payable $ 66,000 16,000 Notes Payable 82,000 21,000 Common Stock, $20 par value 100,000 40,000 Other Contributed Capital 60,000 24,000 Retained Earnings 39,000 19,000 Total Liabilities and Equities…
On January 1, 2013, Peach Company issued 1,390 of its $20 par value common shares with a fair value of $62 per share in exchange for the 1,820 outstanding common shares of Swartz Company in a purchase transaction. Registration costs amounted to $1,752, paid in cash. Just prior to the acquisition, the balance sheets of the two companies were as follows: Peach Company Swartz Company Cash $71,250 $13,190 Accounts receivable (net) 99,260 20,070 Inventory 63,300 26,980 Plant and equipment (net) 99,340 39,970 Land 27,990 21,440 Total assets $361,140 $121,650 Accounts payable $64,130 $16,800 Notes payable 85,460 20,800 Common stock, $20 par value 108,400 36,400 Other contributed capital 58,280 23,800 Retained earnings 44,870 23,850 Total equities $361,140 $121,650 Any difference between the book value of equity and the value implied by the purchase price relates to goodwill.…
On January 1, 2013, Peach Company issued 1,390 of its $20 par value common shares with a fair value of $62 per share in exchange for the 1,820 outstanding common shares of Swartz Company in a purchase transaction. Registration costs amounted to $1,752, paid in cash. Just prior to the acquisition, the balance sheets of the two companies were as follows: Peach Company Swartz Company Cash $71,250 $13,190 Accounts receivable (net) 99,260 20,070 Inventory 63,300 26,980 Plant and equipment (net) 99,340 39,970 Land 27,990 21,440 Total assets $361,140 $121,650 Accounts payable $64,130 $16,800 Notes payable 85,460 20,800 Common stock, $20 par value 108,400 36,400 Other contributed capital 58,280 23,800 Retained earnings 44,870 23,850 Total equities $361,140 $121,650 Any difference between the book value of equity and the value implied by the purchase price relates to goodwill.…
On July 1, 2016, Roland Company exchanged 18,000 of its $45 fair value ($1 par value) shares for all the outstanding shares of Downes Company. Roland paid acquisition costs of $40,000. The two companies had the following balance sheets on July 1, 2016: (see attachment)The following fair values applied to Downes’s assets:Other current assets . . . . . . . . . . . $ 70,000Inventory . . . . . . . . . . . . . . . . . . . 80,000Land. . . . . . . . . . . . . . . . . . . . . . . 90,000Building . . . . . . . . . . . . . . . . . . . . 150,000Equipment . . . . . . . . . . . . . . . . . . 100,0001. Record the investment in Downes Company and any other entry necessitated by the purchase.2. Prepare the value analysis and the determination and distribution of excess schedule.3. Prepare a consolidated balance sheet for July 1, 2016, immediately subsequent to the purchase.
On January 1, 2013, the Sara Company entered into a transaction for acquisition of assets and liabilities of Ana Company. Sara issued P400 in long-term liabilities and 40 shares of common stock having a par value of P1 per share but a fair value of P10 per share. Sara paid P20 to lawyers, accountants and brokers for assistance in bringing about this purchase. Another P15 was paid in connection with stock issuance costs. Prior to these transactions, the balance sheets for the two companies were as follows: Sara Ana Cash P180 P 40 Accounts receivable 810 180 Inventory 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, P1 par (330) Common stock, P20 par (240) Additional paid-in capital (1,080) (340) Retained earnings (1,260) (340) In Sara’s appraisal of Ana, three assets were…
On May 31, 2011, Armstrong Company paid P3,500,000 to acquire all of the common stock of Hall Corporation, which became a division of Armstrong. Hall reported the following balance sheet at the time of the acquisition: Current assets P900,000 Current liabilities P600,000 Noncurrent assets 2,700,000 Long-term liabilities 500,000 Stockholders’ equity 2,500,000 Total liabilities and Total assets P3,600,000 stockholders’ equity P3,600,000 It was determined at the date of the purchase that the fair value of the identifiable net assets of Hall was P2,800,000. At December 31, 2011, Hall reports the following balance sheet information: Current assets P800,000 Noncurrent assets (including goodwill…
On May 31, 2018, Armstrong Company paid $3,500,000 to acquire all of the common stock of Hall Corporation, which became a division of Armstrong. Hall reported the following balance sheet at the time of the acquisition: Current assets $ 900,000 Current liabilities $ 600,000 Noncurrent assets 2,700,000 Long-term liabilities 500,000 Stockholders’ equity 2,500,000 Total liabilities and Total assets $3,600,000 stockholders’ equity $3,600,000 It was determined at the date of the purchase that the fair value of the identifiable net assets of Hall was $3,100,000. At December 31, 2018, Hall reports the following…
On July 1, 2016, Killearn Company acquired 88,000 of the outstanding shares of Shaun Company for $13 per share. This acquisition gave Killearn a 25 percent ownership of Shaun and allowed Killearn to significantly influence the investee’s decisions.As of July 1, 2016, the investee had assets with a book value of $3 million and liabilities of $74,400. At the time, Shaun held equipment appraised at $364,000 above book value; it was con-sidered to have a seven-year remaining life with no salvage value. Shaun also held a copyright with a five-year remaining life on its books that was undervalued by $972,000. Any remaining excess cost was attributable to goodwill. Depreciation and amortization are computed using the straight-line method. Killearn applies the equity method for its investment in Shaun.Shaun’s policy is to declare and pay a $1 per share cash dividend every April 1 and October 1. Shaun’s income, earned evenly throughout each year, was $598,000 in 2016, $639,600 in 2017, and…
On July 1, 2016, Killearn Company acquired 88,000 of the outstanding shares of Shaun Company for $13 per share. This acquisition gave Killearn a 25 percent ownership of Shaun and allowed Killearn to significantly influence the investee's decisions. As of July 1, 2016, the investee had assets with a book value of $3 million and liabilities of $74,400. At the time, Shaun held equipment appraised at $364,000 above book value; it was considered to have a seven-year remaining life with no salvage value. Shaun also held a copyright with a five-year remaining life on its books that was undervalued by $972,000. Any remaining excess cost was attributable to goodwill. Depreciation and amortization are computed using the straight-line method. Killearn applies the equity method for its investment in Shaun. Shaun's policy is to declare and pay a $1 per share cash dividend every April 1 and October 1. Shaun's income, earned evenly throughout each year, was $598,000 in 2016, $639,600 in 2017, and…
On July 1, 2016, Killearn Company acquired 88,000 of the outstanding shares of Shaun Company for $13 per share. This acquisition gave Killearn a 25 percent ownership of Shaun and allowed Killearn to significantly influence the investee’s decisions. As of July 1, 2016, the investee had assets with a book value of $3 million and liabilities of $74,400. At the time, Shaun held equipment appraised at $364,000 above book value; it was considered to have a seven-year remaining life with no salvage value. Shaun also held a copyright with a five-year remaining life on its books that was undervalued by $972,000. Any remaining excess cost was attributable to goodwill. Depreciation and amortization are computed using the straight-line method. Killearn applies the equity method for its investment in Shaun. Shaun’s policy is to declare and pay a $1 per share cash dividend every April 1 and October 1. Shaun’s income, earned evenly throughout each year, was $598,000 in 2016, $639,600 in 2017, and…
On July 1, 2016, Killearn Company acquired 80,000 of the outstanding shares of Shaun Company for $12 per share. This acquisition gave Killearn a 25 percent ownership of Shaun and allowed Killearn to significantly influence the investee's decisions. As of July 1, 2016, the investee had assets with a book value of $3 million and liabilities of $938,000. At the time, Shaun held equipment appraised at $350,000 above book value; it was considered to have a seven-year remaining life with no salvage value. Shaun also held a copyright with a five-year remaining life on its books that was undervalued by $1,160,000. Any remaining excess cost was attributable to goodwill. Depreciation and amortization are computed using the straight-line method. Killearn applies the equity method for its investment in Shaun. Shaun's policy is to declare and pay a $1 per share cash dividend every April 1 and October 1. Shaun's income, earned evenly throughout each year, was $585,000 in 2016, $617,600 in 2017,…

SEE MORE QUESTIONS

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

Auditing: A Risk Based-Approach to Conducting a Q…

Accounting

ISBN:

9781305080577

Author:

Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:

South-Western College Pub

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

Auditing: A Risk Based-Approach to Conducting a Q…

Accounting

ISBN:

9781305080577

Author:

Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:

South-Western College Pub

SWFT Comprehensive Volume 2019

Accounting

ISBN:

9780357233306

Author:

Maloney

Publisher:

Cengage

Financial Accounting

Accounting

ISBN:

9781305088436

Author:

Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:

Cengage Learning

Financial Reporting, Financial Statement Analysis…

Finance

ISBN:

9781285190907

Author:

James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:

Cengage Learning

SEE MORE TEXTBOOKS