PROBLEM X Red Corporation will issue common shares with a par value of P10 for the net assets of Blue Company. Red's Common stock has a current market value of P40 per share. Blue's statement of financial position on the date of acquisition follow: Current assets P320,000 Common stock, P5 par P80,000 Property and Equipment 880,000 Additional paid in capital 320,000 Liabilities 400,000 Retained Earnings 400,000 Blue's current assets are appraised at P400,000 and the property and equipment was also appraised at P1,600,000. Its liabilities are fairly value. Accordingly, Red Corporation issued shares of its common stock with a total market value equal to that of Blue's net assets including goodwill. 1. To recognize goodwill of P200,000, how many shares were to be issued?

PROBLEM X Red Corporation will issue common shares with a par value of P10 for the net assets of Blue Company. Red's Common stock has a current market value of P40 per share. Blue's statement of financial position on the date of acquisition follow: Current assets P320,000 Common stock, P5 par P80,000 Property and Equipment 880,000 Additional paid in capital 320,000 Liabilities 400,000 Retained Earnings 400,000 Blue's current assets are appraised at P400,000 and the property and equipment was also appraised at P1,600,000. Its liabilities are fairly value. Accordingly, Red Corporation issued shares of its common stock with a total market value equal to that of Blue's net assets including goodwill. 1. To recognize goodwill of P200,000, how many shares were to be issued?

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...

See similar textbooks

Similar questions

Treasury Stock, No Par Propst-Steele Production Corporations accounting records provide the following information: 1. Issued 5,000 shares of no-par common stock at 15 per share. 2. Issued an additional 5,000 shares of 110-par common stock at 17 per share. 3. Reacquired 500 shares of its no-par common stock at a cost of 12.50 per share. 4. Reissued 200 of its treasury shares at 14 per share. 5. Reissued the remaining treasury shares at 11 per share. Required: Prepare journal entries to account for the preceding stock transactions of Propst-Steele Production, assuming it uses the cost method for treasury stock.
Ames Corporation repurchases 10,000 shares of its common stock for $12 per share. The shares were originally issued at an average price of $10 per share. Later it resells 6,000 of the shares for $15 per share and the remaining 4,000 shares for $17 per share. How much gain or loss should Ames report on its income statement as a result of these transactions? $38.000 gain $0 $20,000 loss $20,000 loss and $38,000 gain
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?
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