Advanced Financial Accounting
12th Edition
ISBN: 9781259916977
Author: Christensen, Theodore E., COTTRELL, David M., Budd, Cassy
Publisher: Mcgraw-hill Education,
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Textbook Question
Chapter 1, Problem 1.11E
Balances Reported Following Combination
Palm Corporation and Staple Company have announced terms of an exchange agreement underwhich Palm will issue 8,000 shares of its $10 par value common stock to acquire all of Staple Company’s assets. Palm shares currently are trading at $50, and Staple $5 par value shares are tradingat $18 each. Historical Cost and fair value balance sheet data on January 1, 20X2, are as follows;
Required
What amount will be reported immediately following the business combination for each of the following items in the combined balance sheet?
a. Common Stock.
b. Cash and Receivables.
c. Land.
d. Buildings and Equipment (net).
e.
f. Additional Paid-In Capital.
g.
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Palm Corporation and Staple Company have announced terms of an exchange agreement under which Palm will issue 8,500 shares of its $15 par value common stock to acquire all of Staple Company’s assets. Palm shares currently are trading at $59, and Staple $10 par value shares are trading at $23 each. Historical cost and fair value balance sheet data on January 1, 20X2, are as follows:
Palm Corporation
Staple Company
Balance Sheet Item
Book Value
Fair Value
Book Value
Fair Value
Assets
Cash & Receivables
$
151,000
$
151,000
$
46,000
$
46,000
Land
110,000
190,000
57,000
83,000
Buildings & Equipment (net)
313,000
411,000
176,000
230,000
Total Assets
$
574,000
$
752,000
$
279,000
$
359,000
Equities
Common Stock
$
200,000
$
81,000
Additional Paid-In Capital
18,000
9,900
Retained Earnings…
KING COMPANY issued 120,000 shares of P25 par ordinary shares for all the outstanding stock of FISHER CORPORATION in a business combination consummated on July 1, 2018. King’s ordinary shares were selling at P40 per share at the time of consummation of the combination. In addition, cash payment of P 200,000.00 was made and a deffered cash payment of P 1500,000.00 payable on July 1, 2019. Market rate of interest is 12%. FISHER’s Net assets are P3.8 million at book value. Out of pocket costs of the combination were as follows: legal and accounting fees related with the issuance of shares, P 12,000.00 and printing cost of stock certificates, P9400.00. A contingent consideration which is probable and can be reasonably estimated amounted to P 50,200.00.
1. What is the total cost of the investment?a. P 6,389,486b. P 8,983,864c. P 6,983,684d. P 8,389,648
P Company issues Php500,000 shares of its own Php10 par common stock for the net assets of S Company in a merger consummated on July 1, 2020. On this date, P stock is quoted at P20 per share. Summary of Balance sheet data for the two companies at July 1, 2020, just before combination, are as follows:
Calculate the retained earnings of P Company immediately after the combination:
Chapter 1 Solutions
Advanced Financial Accounting
Ch. 1 - What types of circumstances would encourage...Ch. 1 - How would the decision to dispose of a segment of...Ch. 1 - Prob. 1.3QCh. 1 - Prob. 1.4QCh. 1 - Prob. 1.5QCh. 1 - Prob. 1.6QCh. 1 - Prob. 1.7QCh. 1 - Prob. 1.8QCh. 1 - Prob. 1.9QCh. 1 - Prob. 1.10Q
Ch. 1 - Prob. 1.11QCh. 1 - Prob. 1.12QCh. 1 - Prob. 1.13QCh. 1 - Prob. 1.14QCh. 1 - Within the measurement period following a business...Ch. 1 - Prob. 1.16QCh. 1 - Prob. 1.1CCh. 1 - Prob. 1.2CCh. 1 - Prob. 1.3CCh. 1 - Prob. 1.4CCh. 1 - Risks Associated with Acquisitions Not all...Ch. 1 - Prob. 1.6CCh. 1 - Prob. 1.1.1ECh. 1 - Prob. 1.1.2ECh. 1 - Prob. 1.1.3ECh. 1 - Multiple-Choice Questions on Complex Organizations...Ch. 1 - Prob. 1.1.5ECh. 1 - Prob. 1.2.1ECh. 1 - Prob. 1.2.2ECh. 1 - Multiple-Choice Questions on Recording Business...Ch. 1 - Prob. 1.2.4ECh. 1 - Multiple-Choice Questions on Recording Business...Ch. 1 - Multiple-Choice Questions on Reported Balances...Ch. 1 - Multiple-Choice Questions on Reported Balances...Ch. 1 - Prob. 1.3.3ECh. 1 - Prob. 1.3.4ECh. 1 - Prob. 1.4.1ECh. 1 - Prob. 1.4.2ECh. 1 - Prob. 1.4.3ECh. 1 - Multiple-Choice Questions Involving Account...Ch. 1 - Prob. 1.4.5ECh. 1 - Prob. 1.5ECh. 1 - Prob. 1.6ECh. 1 - Prob. 1.7ECh. 1 - Prob. 1.8ECh. 1 - Prob. 1.9ECh. 1 - Prob. 1.10ECh. 1 - Balances Reported Following Combination Palm...Ch. 1 - Goodwill Recognition Spur Corporation reported the...Ch. 1 - Acquisition Using Debentures Planter Corporation...Ch. 1 - Bargain Purchase Using the data resented in E1-13,...Ch. 1 - Prob. 1.15ECh. 1 - Prob. 1.16ECh. 1 - Prob. 1.17ECh. 1 - Prob. 1.18ECh. 1 - Prob. 1.19ECh. 1 - Prob. 1.20ECh. 1 - Prob. 1.21ECh. 1 - Prob. 1.22ECh. 1 - Prob. 1.23ECh. 1 - Prob. 1.24PCh. 1 - Prob. 1.25PCh. 1 - Prob. 1.26PCh. 1 - Acquisition in Multiple Steps Peal Corporation...Ch. 1 - Prob. 1.28PCh. 1 - Prob. 1.29PCh. 1 - Prob. 1.30PCh. 1 - Prob. 1.31PCh. 1 - Computation of Account Balances Saspro Division is...Ch. 1 - Prob. 1.33PCh. 1 - Prob. 1.34PCh. 1 - Prob. 1.35PCh. 1 - Business Combination Following are the balance...Ch. 1 - Prob. 1.37PCh. 1 - Prob. 1.38PCh. 1 - Prob. 1.39PCh. 1 - Prob. 1.40P
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