Advanced Financial Accounting
12th Edition
ISBN: 9781259916977
Author: Christensen, Theodore E., COTTRELL, David M., Budd, Cassy
Publisher: Mcgraw-hill Education,
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Chapter 1, Problem 1.22E
To determine
Concept Introduction: Consolidation is the process of accounting where books of the parent company is reported along with the books of the subsidiary company in consolidated/combined form after making necessary
To Explain: all the
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On May 1, Donovan Company reported the following account balances:Current assets . . . . . . . . . . . . $ 90,000Buildings & equipment (net) . 220,000Total assets . . . . . . . . . . . .. . $310,000Liabilities . . . . . . . . . . . . . . . . $ 60,000Common stock . . . . . . . . . . . . . 150,000Retained earnings . . . . . . . . . 100,000Total liabilities and equities . $310,000On May 1, Beasley paid $400,000 in stock (fair value) for all of the assets and liabilities of Donovan, which will cease to exist as a separate entity. In connection with the merger, Beasley incurred $15,000 in accounts payable for legal and accounting fees.Beasley also agreed to pay $75,000 to the former owners of Donovan contingent on meeting certain revenue goals during the following year. Beasley estimated the present value of its probability adjusted expected payment for the contingency at $20,000. In determining its offer, Beasley noted the following:∙ Donovan holds a building with a fair value…
On May 1, Donovan Company reported the following account balances:Current assets . . . . . . . . . . . . $ 90,000Buildings & equipment (net) . 220,000Total assets . . . . . . . . . . . .. . $310,000Liabilities . . . . . . . . . . . . . . . . $ 60,000Common stock . . . . . . . . . . . . . 150,000Retained earnings . . . . . . . . . 100,000Total liabilities and equities . $310,000On May 1, Beasley paid $400,000 in stock (fair value) for all of the assets and liabilities of Donovan, which will cease to exist as a separate entity. In connection with the merger, Beasley incurred $15,000 in accounts payable for legal and accounting fees.Beasley also agreed to pay $75,000 to the former owners of Donovan contingent on meeting certain revenue goals during the following year. Beasley estimated the present value of its probability adjusted expected payment for the contingency at $20,000. In determining its offer, Beasley noted the following:∙ Donovan holds a building with a fair value…
On May 1, Donovan Company reported the following account balances:
Current assets
$
113,000
Buildings & equipment (net)
258,500
Total assets
$
371,500
Liabilities
$
102,000
Common stock
150,000
Retained earnings
119,500
Total liabilities and equities
$
371,500
On May 1, Beasley paid $425,500 in stock (fair value) for all of the assets and liabilities of Donovan, which will cease to exist as a separate entity. In connection with the merger, Beasley incurred $22,500 in accounts payable for legal and accounting fees.
Beasley also agreed to pay $85,000 to the former owners of Donovan contingent on meeting certain revenue goals during the following year. Beasley estimated the present value of its probability adjusted expected payment for the contingency at $27,200. In determining its offer, Beasley noted the following:
Donovan holds a building with a fair value $37,900 more than its book value.
Donovan has developed unpatented…
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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- On May 1, Donovan Company reported the following account balances: Current assets $ 96,500 Buildings & equipment (net) 222,000 Total assets $ 318,500 Liabilities $ 33,500 Common stock 150,000 Retained earnings 135,000 Total liabilities and equities $ 318,500 On May 1, Beasley paid $443,900 in stock (fair value) for all of the assets and liabilities of Donovan, which will cease to exist as a separate entity. In connection with the merger, Beasley incurred $23,000 in accounts payable for legal and accounting fees. Beasley also agreed to pay $83,100 to the former owners of Donovan contingent on meeting certain revenue goals during the following year. Beasley estimated the present value of its probability adjusted expected payment for the contingency at $23,200. In determining its offer, Beasley noted the following: Donovan holds a building with a fair value $30,400 more than its book value. Donovan has developed unpatented…arrow_forwardCompanies X, Y and Z, parties to a consolidation, have the following data: X Co Y Co Z CoNet assets P400,000 P600,000 P1,000,000Average annual earnings 60,000 60,000 80,000The parties collectively agreed that the new corporation, AA Co will issue a single class of stock based on the earnings ratio. What is the stock distribution ratio to companies X, Y and Z, respectively?arrow_forwardMG Corporation exchange 150,000 shares of newly issued P1 par value common stock with a fair market value of P25 per share for all of the outstanding PS par value common stock of GC Company and such is then dissolved. MG Corp. paid the following costs and expenses related to the business combination: Costs of special shareholders’ meeting to vote on the merger P13,000 Registering and issuing securities 14,000 Accounting and legal fees 9,000 Salaries of MG Corp.’s employees assigned to the implementation of the merger 15,000 Cost of closing duplicate facilities 11,000 In the business combination of MG Corp and GC Company Group of answer…arrow_forward
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