Concept explainers
a.
To calculate: The number of shares issued when market value of common stock is $25 per share.
Introduction: Common stock is a security or investment that represents ownership in the company. It is the part of company’s capital that provides shareholders a right to share profits and vote on company’s policies and composition of board of directors.
b.
To calculate: The par value per share of common stock.
Introduction: Common stock is a security or investment that represents ownership in the company. It is the part of company’s capital that provides shareholders a right to share profits and vote on company’s policies and composition of board of directors.
c.
To calculate: The amount of
Introduction: Goodwill is an intangible asset that specifies the market value of the company. It includes the company’s brand value, customer base and relation, and relationship with employees. It is not separately defined and has a contractual or legal right on the company.
Want to see the full answer?
Check out a sample textbook solutionChapter 1 Solutions
Connect Access Card For Advanced Financial Accounting
- On 30 June 20X1, Buyer plc obtained control of Target plc by purchased 60% of Target plc’s ordinary shares. The revenue reported by Buyer plc and Target plc in their separate income statements for the financial year ending 31 December 20X1 are £10,000 and £2,000 respectively. Assume no intra-group transactions and revenues are spread evenly throughout the year. Revenue reported in Buyer plc’s consolidated income statement for the year ending 31 December 20X1 is: a. £12,000 b. £11,200 c. £11,000 d. £10,600 e. £6,000arrow_forwardAssume that both the Parent and Subsidiary adopt 31 December as their financial year-end. Further assume that the transactions were conducted on cash basis. (i) Prepare all the relevant journal entries in the separate financial statements of the respective companies. (ii) Prepare all the relevant consolidation journal entries for the preparation of the consolidated financial statements of the Parent. (b) On 20 December 20x1, a 70%-owned Subsidiary sold a piece of inventory Y which it bought for $300,000 to its Parent for $200,000. As at 31 December 20x1, that piece of inventory was still with the Parent and the net realisable value of the inventory was $250,000 on this date.arrow_forwardOn February 1, 20x1, Paco Corp. acquired outstanding ordinary shares of School Inc. for cash. The incomplete working paper elimination entries on that date for the consolidated of statement of financial position of Paco Corp. and School Inc. are shown below: WPEE 1 Shareholders' equity - School Inc. 1,453,500 Investment in School Inc. 1,235,475 Non-controlling interest 218,025 WPEE 2 Inventories 33,150 Equipment 280,500 Goodwill ? Investment in School Inc. 349,775 Non-controlling interest ? Assuming NCI is measured at fair value, the cash consideration includes control premium of P20,000, what is the amount of goodwill?arrow_forward
- On January 1, 2022 an SME acquired 25% of the equity of each of entities A and B for P1,000,000 and P3,000,000 respectively. Transaction costs of 10% of the purchase price of the shares were incurred by SME. On January 2, 2022, entity A declared and paid dividend of P800,000. For the year ended December 31, 2022, entity A recognized profit of P1,000,000. However, entity B recognized a loss of P2,000,000 for that year. Published price quotations do not exist for the shares of entities A and B. Using appropriate valuation techniques, SME determined the fair value of the investments in entities A and B on December 31, 2022 at P1,500,000 and P2,000,000 respectively. Cost of disposal are estimated at 10% of the fair value of the investment. 33. 34. 35. Under the fair value model, what is the total carrying amount of the investment in associates on December 31, 2022? *arrow_forwardOn January 1, Parent Company acquired 90% of Subsidiary Company in exchange for 5,400 shares of P10 parcommon stock having a market value of P120,600. Parent and Subsidiary condensed balance sheet on January 1,were as follows: Using the proportionate basis or partial goodwill method, compute the following:1. The amount of goodwill on January 1:A. P 2,600 C. P 14,400B. P 3,800 D. P 25,2002. The equity holders of parent (or controlling interest) retained earnings on January 1:A. P 48,000 C. P 84,900B. P52,100 D. P 89,0003. The consolidated retained earnings on January 1:A. P 48,000 C. P 84,900B. P52,100 D. P 89,000arrow_forwardBusiness Combination - Accounting for an acquirer) On 1 July 2020, B Ltd acquired all the assets and liabilities of P Ltd. In exchange for these assets and liabilities, Brad Ltd issued 100,000 shares that at date of issue had a fair value of $4.50 per share. Costs of issuing these shares amounted to $2,000. Legal costs associated with the acquisition of Pitt Ltd amounted to $3,200. The asset and liabilities of P Ltd at 1 July 2020 were as follows (Extract): Assets Carrying Amount Fair Value Cash $ 3 000 - Account Receivable 12 000 $ 12 000 Inventories 63 000 69 000 Plant and equipment 330 000 225 000 Accumulated Depreciation – plant and Equipment (100 000) - Land 200 000 280 000 Liabilities Accounts payable 22 000 22 000 Debentures 68 000 68 000 Required: prepare the journal entries in the records of B Ltd at 1 July 2020.arrow_forward
- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage LearningCornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
- Financial Reporting, Financial Statement Analysis...FinanceISBN:9781285190907Author:James M. Wahlen, Stephen P. Baginski, Mark BradshawPublisher:Cengage Learning