EBK ADVANCED FINANCIAL ACCOUNTING
11th Edition
ISBN: 8220102796096
Author: Christensen
Publisher: YUZU
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Chapter 1, Problem 1.22E
To determine
To prepare:
Introduction: Internal expansion refers to situation in a company forms a subsidiary by transferring some of its assets and liabilities and in exchange of ownership shares. Shares of the subsidiary is either provided to the shareholders in addition to their existing shares (Spin off) or in exchange of their existing shares (split off).
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On March 1, 2020 Ajax Corporation acquired
all the assets and liabilities of Chelsea
Corporation by issuing shares of its common
stock. The following is a balance sheet data
for the companies prior to the business
combination and immediately following the
combination:
Ajax
Chelsea Combined
Corporation Corporation
Cash
$
$ 75,000
$ 35,000 $ 110,000
Accounts
92,000
30,000
122,000
receivable
Inventory
45,000
43,000
98,000
Equipment
(net)
420,000
150,000
620,000
Goodwill
XXX
Total
$ 632,000
$ 258,000
XXX
Assets
Accounts
$ 375,000
$ 125,000 $ 500,000
payable
Common
stock, $2
120,000
40,000
200,000
par
Additional
85,000
30,000
245,000
paid-in
capital
Retained
52,000
63,000
XX
earnings
Total
$ 632,000
$ 258,000
XXX
Liabilities
& Equity
What balance in Retained earnings will the
combined entity report immediately following
the combination?
Select one:
O a. $ 52,000
O b. $ 0
O c. $ 63,000
O d. $ 115,000
On January 1, year 2, ABC Company exchanged 150,000 shares of its P20 par value common stock for all of XYZ's net assets. Both corporations continued to operate as separate businesses, maintaining accounting records with years ending December 31. ABC uses the equity method to account for its investment in XYZ. Information from separate company operations follows:
Retained earnings-12/31/Y1
(ABC) P3,200,000 and (XYZ) P925,000
Net income-six months ended 6/30/Y2
(ABC) P800,000 and (XYZ) P275,000
Dividends paid-3/25/Y2 by ABC was P750,000
What amount of retained earnings would ABC reports in its June 30, year 2 consolidated balance sheet?
The answer is 3,250,000. How is this solved?
On January 1, year 2, ABC Company exchanged 150,000
shares of its P20 par value common stock for all of XYZ's net
assets. Both corporations continued to operate as separate
businesses, maintaining accounting records with years
ending December 31. ABC uses the equity method to
account for its investment in XYZ. Information from separate
company operations follows: Retained earnings-12/31/Y1
(ABC) P3,200,00 and (XYZ) P925,000; Net income - six
months ended 6/30/Y2 (ABC) P800,000 and (XYZ) P275,00O;
Dividends paid-3/25/Y2 by ABC was P750,000. What amount
of retained earnings would ABC reports in its June 30, year 2
consolidated balance sheet? *
Your answer
Chapter 1 Solutions
EBK 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. 1.8QCh. 1 - Prob. 1.9QCh. 1 - Prob. 1.10QCh. 1 - Prob. 1.11Q
Ch. 1 - Prob. 1.12QCh. 1 - Prob. 1.13QCh. 1 - Prob. 1.14QCh. 1 - Prob. 1.15QCh. 1 - Within the measurement period following a business...Ch. 1 - Prob. 1.17QCh. 1 - Prob. 1.1CCh. 1 - Prob. 1.3CCh. 1 - Prob. 1.4CCh. 1 - Risks Associated with Acquisitions Not all...Ch. 1 - Prob. 1.8CCh. 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 - Prob. 1.4.4ECh. 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 - Prob. 1.11ECh. 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 - Prob. 1.27PCh. 1 - Prob. 1.28PCh. 1 - Prob. 1.29PCh. 1 - Prob. 1.30PCh. 1 - Prob. 1.31PCh. 1 - Prob. 1.32PCh. 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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