GEN COMBO ADVANCED ACCOUNTING; CONNECT ACCESS CARD
13th Edition
ISBN: 9781260087383
Author: Joe Ben Hoyle
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 2, Problem 12P
On May 1, Donovan Company reported the following account balances:
| Current assets | $ 90,000 |
| Buildings & equipment (net) | 220,000 |
| Total assets | $310,000 |
| Liabilities | $ 60,000 |
| Common stock | 150,000 |
| Retained earnings | 100,000 |
| Total liabilities and equities | $310,000 |
On 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 $30,000 more than its book value.
- Donovan has developed unpatented technology appraised at $25,000, although is it not recorded in its financial records.
- Donovan has a research and development activity in process with an appraised fair value of $45,000. The project has not yet reached technological feasibility.
- Book values for Donovan's current assets and liabilities approximate fair values.
12. What should Beasley record as total liabilities incurred or assumed in connection with the Donovan merger?
-
- a. $15,000
- b. $75,000
- c. $95,000
- d. $150,000
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On May 1, Donovan Company reported the following account balances:
Current assets
$
92,500
Buildings & equipment (net)
240,000
Total assets
$
332,500
Liabilities
$
64,500
Common stock
150,000
Retained earnings
118,000
Total liabilities and equities
$
332,500
On May 1, Beasley paid $425,700 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 $24,200 in accounts payable for legal and accounting fees.
Beasley also agreed to pay $87,300 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 $29,900. In determining its offer, Beasley noted the following:
Donovan holds a building with a fair value $30,300 more than its book value.
Donovan has developed unpatented…
Chapter 2 Solutions
GEN COMBO ADVANCED ACCOUNTING; CONNECT ACCESS CARD
Ch. 2 - Prob. 1QCh. 2 - Prob. 2QCh. 2 - What does the term consolidated financial...Ch. 2 - Within the consolidation process, what is the...Ch. 2 - Prob. 5QCh. 2 - Prob. 6QCh. 2 - Prob. 7QCh. 2 - Prob. 8QCh. 2 - Prob. 9QCh. 2 - Prob. 10Q
Ch. 2 - Prob. 11QCh. 2 - Which of the following does not represent a...Ch. 2 - Prob. 2PCh. 2 - Prob. 3PCh. 2 - Prob. 4PCh. 2 - Prob. 5PCh. 2 - An acquired entity has a long-term operating lease...Ch. 2 - When does gain recognition accompany a business...Ch. 2 - Prob. 8PCh. 2 - Prob. 9PCh. 2 - Prob. 10PCh. 2 - On June 1, Cline Co. paid 800,000 cash for all of...Ch. 2 - On May 1, Donovan Company reported the following...Ch. 2 - Prob. 13PCh. 2 - Prob. 14PCh. 2 - Prob. 15PCh. 2 - Prob. 16PCh. 2 - On its acquisition-date consolidated balance...Ch. 2 - On its acquisition-date consolidated balance...Ch. 2 - Problems 19 and 20 are based on the following...Ch. 2 - In the December 31, 2017, consolidated balance...Ch. 2 - Prob. 21PCh. 2 - The following book and fair values were available...Ch. 2 - Prob. 23PCh. 2 - Prob. 24PCh. 2 - Prob. 25PCh. 2 - Prob. 26PCh. 2 - Prob. 27PCh. 2 - Prob. 28PCh. 2 - Prob. 29PCh. 2 - Prob. 30PCh. 2 - Prob. 31PCh. 2 - SafeData Corporation has the following account...Ch. 2 - Prob. 33PCh. 2 - Prob. 34PCh. 2 - Prob. 35APACh. 2 - On February 1, Piscina Corporation completed a...Ch. 2 - Prob. 37APBCh. 2 - Prob. 38APBCh. 2 - Prob. 1DYSCh. 2 - Prob. 2DYSCh. 2 - Prob. 3DYSCh. 2 - Prob. 4DYS
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