Advanced Accounting
12th Edition
ISBN: 9781305084858
Author: Paul M. Fischer, William J. Tayler, Rita H. Cheng
Publisher: Cengage Learning
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Question
Chapter 2, Problem 2.1E
(a)
To determine
Concept Introduction: A
To record: The acquisition entry that Glass Company would make in books of accounts.
(b)
To determine
Concept Introduction: A balance sheet is mandatory for any accounting book. There are certain potential issues that may occur in the process of balance sheet or recording a purchase. Starting from manipulations to minor mistakes, all the issues have to be properly checked so as to ensure that the entry is proper.
To prepare: The balance sheet for glass after the acquisition.
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Glass Company is thinking about acquiring Plastic Company. Glass Company is considering two methods of accomplishing control and is wondering how the accounting treatment will differ under each method. Glass Company has estimated that the fair values of Plastic’s net assets are equal to their book values, except for the equipment, which is understated by $20,000.The following balance sheets have been prepared on the date of acquisition:Assets Glass PlasticCash . . . . . . . . . . . . . . . . . . . . . . . . . . . $540,000 $ 20,000Accounts receivable . . . . . . . . . . . . . . . 50,000 70,000Inventory . . . . . . . . . . . . . . . . . . . . . . . . 50,000 100,000Property, plant, and equipment (net) . . . 230,000 270,000Total assets. . . . . . . . . . . . . . . . . . . . . $870,000…
(b) Discuss the relevant accounting treatments.
At the date of acquisition, assets of Sahara Berhad include brand name ofRM300,000 in its Statement of Financial Position. However, directors of KofLet Berhad believed the brand name to have no recoverable value at the date of acquisition. Therefore, Sahara Berhad wrote it off shortly after itsacquisition.
1.) If a newly acquired asset is ‘held for sale’, the asset or disposal group will be measured at:
A. Cost
B. The lower of “Cost” and “Fair value, less costs to sell’
C. The higher of “Cost” and “Fair value, less costs to sell’
D. Fair value, less costs to sell
2.) An adjustment, to the carrying amount of a non-current asset that ceases to be classified as ‘held for sale’, is recorded in:
A. Income from continuing operations
B. Equity
C. Income from discontinued operations
D. Secret
Chapter 2 Solutions
Advanced Accounting
Ch. 2 - Prob. 1UTICh. 2 - Prob. 2UTICh. 2 - Prob. 3UTICh. 2 - Prob. 4UTICh. 2 - Prob. 5UTICh. 2 - Prob. 6UTICh. 2 - Santos Corporation is considering investing in...Ch. 2 - Prob. 2.1ECh. 2 - Prob. 2.2ECh. 2 - Prob. 3.1E
Ch. 2 - Prob. 3.2ECh. 2 - Prob. 4.1ECh. 2 - Prob. 4.2ECh. 2 - Prob. 4.3ECh. 2 - Prob. 5.1ECh. 2 - Prob. 5.2ECh. 2 - Prob. 6.1ECh. 2 - Prob. 6.2ECh. 2 - Prob. 7.1ECh. 2 - Prob. 7.2ECh. 2 - Prob. 8.1ECh. 2 - Prob. 9.1ECh. 2 - Prob. 9.2ECh. 2 - Prob. 9.4ECh. 2 - Prob. 2A.1AECh. 2 - Prob. 2.1.1PCh. 2 - Prob. 2.1.2PCh. 2 - Prob. 2.2.1PCh. 2 - Prob. 2.2.2PCh. 2 - Prob. 2.2.3PCh. 2 - Prob. 2.3.1PCh. 2 - Prob. 2.3.2PCh. 2 - Prob. 2.3.3PCh. 2 - Prob. 2.4.1PCh. 2 - Prob. 2.4.2PCh. 2 - Prob. 2.4.3PCh. 2 - Prob. 2.5.1PCh. 2 - Prob. 2.5.2PCh. 2 - Prob. 2.5.3PCh. 2 - Prob. 2.6.1PCh. 2 - Prob. 2.6.2PCh. 2 - Prob. 2.7.1PCh. 2 - Prob. 2.7.2PCh. 2 - Prob. 2.8.1PCh. 2 - Prob. 2.8.2PCh. 2 - Prob. 2.9.1PCh. 2 - Prob. 2.9.2PCh. 2 - Prob. 2.10.1PCh. 2 - Prob. 2.11.1PCh. 2 - Prob. 2.12.1PCh. 2 - Prob. 2.12.2PCh. 2 - Prob. 2.13.1PCh. 2 - Prob. 2.13.2PCh. 2 - Prob. 2.14.1PCh. 2 - Prob. 2.14.2PCh. 2 - Prob. 2.15.1PCh. 2 - Prob. 2.15.2PCh. 2 - Prob. 2A.1.1APCh. 2 - Prob. 2A.1.2APCh. 2 - Prob. 2.1.1CCh. 2 - Prob. 2.1.2C
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