ADVANCED ACCOUNTING-LL
13th Edition
ISBN: 9781260232486
Author: Hoyle
Publisher: MCGRAW-HILL CUSTOM PUBLISHING
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Question
Chapter 2, Problem 30P
1.
To determine
Prepare Company A’s entry to record its acquisition of Company D in its accounting records assuming the cash exchange amounts is $145,000.
2.
To determine
Prepare Company A’s entry to record its acquisition of Company D in its accounting records assuming the cash exchange amounts is $110,000.
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Allerton Company acquires all of Deluxe Company’s assets and liabilities for cash on January 1, 2018, and subsequently formally dissolves Deluxe. At the acquisition date, the following book and fair values were available for the Deluxe Company accounts:
BookValues
FairValues
Current assets
$
20,250
$
20,250
Building
110,250
65,150
Land
17,250
28,550
Trademark
0
34,600
Goodwill
37,500
?
Liabilities
(50,250
)
(50,250
)
Common stock
(100,000
)
Retained earnings
(35,000
)
1&2. Prepare Allerton’s entry to record its acquisition of Deluxe in its accounting records assuming the following cash exchange amounts: $132,000 and $86,000. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Allerton Company acquires all of Deluxe Company’s assets and liabilities for cash on January 1, 2021, and subsequently formally dissolves Deluxe. At the acquisition date, the following book and fair values were available for the Deluxe Company accounts:
BookValues
FairValues
Current assets
$
41,500
$
41,500
Building
108,000
67,000
Land
17,000
35,200
Trademark
0
31,800
Goodwill
19,000
?
Liabilities
(50,500
)
(50,500
)
Common stock
(100,000
)
Retained earnings
(35,000
)
1&2. Prepare Allerton’s entry to record its acquisition of Deluxe in its accounting records assuming the following cash exchange amounts: $166,000 and $96,000. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Record the acquisition of Delex assuming the cash exchange of $166,000.
Record the acquisition of Delex assuming the cash exchange of $96,000.
Grand Champion Inc. purchased America’s Sweethearts Corporation on January 1, 2019. At the time, America’s Sweethearts had the following assets and liabilities (stated at fair value):
Cash
$63,000
Accounts receivable
137,000
Inventory
185,000
Property, plant, and equipment
300,000
Patent
65,000
Accounts payable
220,000
Notes payable
325,000
Grand Champion paid $900,000 for America’s Sweethearts. Assume that America’s Sweethearts is a reporting unit of Grand Champion. At the end of 2020, America’s Sweethearts has a fair value of $730,000 and a book value of $870,000, which includes any goodwill recorded. Of this fair value, $340,000 is attributable to identifiable assets net of (or identifiable net assets) liabilities.
Required:
Calculate the impairment loss of goodwill (if any) and record the appropriate journal entry.
Chapter 2 Solutions
ADVANCED ACCOUNTING-LL
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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- On September 1, 2018, Vernon Corporation acquired Barlow Enterprises for a cash payment of $820.000. At the time of purchases. Barlow's balance sheet showed assets of $610.000. liabilities of $240.000, and owner's equity of $420.000. The fair value of Barlow's assets is estimated to be 5970.000.The liabilities are all estimated to be at fair value. a) Compute the amount of goodwill acquired by Vernon. 120000 b) On December 31, 2020, the fair value of Barlow as a reporting unit is estimated to be $720.000. The carrying value of Vernon's investment in Barlow at year-end is $750.000. The fair value of Barlow's identifiable net asset, excluding the goodwill, is determined to be 655.000 Prepare Vernon's journal entry, if necessary, to record impairment of goodwill. Please use the new standard (Hint: The FASB's new goodwill Impairment testing guidance- ASU 2017-04 is required for public SEC filers for periods beginning after December 15. 2019) Note: Please use integer only. Do not use a S.…arrow_forwardOn January 1, 2025, Henderson Company purchased 100% of the common stock of Caramel Company for $590,000 cash. Fair values differed from book values as follows: Fair value Land 100,000 Patent 250,000 Bonds Payable 105,000 The trial balances of the companies at the acquisition date are as follows: Trial Balance Account Titles Henderson Caramel Cash 650,000 65,000 Land 120,000 30,000 Buildings, net 250,000 180,000 Goodwill 400,000 200,000 Current Liabilities 170,000 75,000 Bonds Payable 500,000 100,000 Common Stock 70,000 30,000 APIC 350,000 70,000 Retained Earnings 330,000 200,000 Which of the following is not one of the eliminations and adjustments included on the consolidation worksheet at the acquisition date? Question 9Answer a. Debit to Common Stock for $30,000 b. Credit to Goodwill for $200,000 c. Credit to Investment in Sub for $590,000 d. Debit to Land for…arrow_forwardOn January 1, 2025, Henderson Company purchased 100% of the common stock of Caramel Company for $590,000 cash. Fair values differed from book values as follows: Fair value Land 100,000 Patent 250,000 Bonds Payable 105,000 The trial balances of the companies at the acquisition date are as follows: Trial Balance Account Titles Henderson Caramel Cash 650,000 65,000 Land 120,000 30,000 Buildings, net 250,000 180,000 Goodwill 400,000 200,000 Current Liabilities 170,000 75,000 Bonds Payable 500,000 100,000 Common Stock 70,000 30,000 APIC 350,000 70,000 Retained Earnings 330,000 200,000 The amount reported for Cash on the consolidated balance sheet at the acquisition date is Question Answer a. $125,000 b. $650,000 c. $65,000 d. $715,000arrow_forward
- On January 1, 2025, Caramel Company purchased 100% of the common stock of Harlor Company for $590,000 cash. Fair values differed from book values as follows: Fair value Land 100,000 Patent 250,000 Bonds Payable 105,000 The trial balances of the companies at the acquisition date are as follows: Trial Balance Account Titles Caramel Harlor Cash 650,000 65,000 Land 120,000 30,000 Buildings, net 250,000 180,000 Goodwill 400,000 200,000 Current Liabilities 170,000 75,000 Bonds Payable 500,000 100,000 Common Stock 70,000 30,000 APIC 350,000 70,000 Retained Earnings 330,000 200,000 The amount reported for Cash on the consolidated balance sheet at the acquisition date isarrow_forwardPeter Corporation purchased the net assets of Salim, Inc. on January 2, 2020 for $380,000 cash and also paid legal fees associated with acquisition of Salim of $15,000. Issuance expenses were $10,000. Salim, Inc. was dissolved on the date of the acquisition. Salim's balance sheet on January 2, 2020 was as follows: $90,000 220,000 30,000 20,000 40,000 $400,000 $75,000 90,000 10,000 205,000 20,000 $400,000 Accounts receivable-net Current liabilities Long term debt Common stock ($1 par) Addtl. paid-in capital Retained earnings Total liab. & equity Inventory Land Building-net Equipment-net Total assets Fair values agree with book values except for inventory, land, and equipment, which have fair values of $260,000, $35,000 and $35,000, respectively. Salim has patent rights with a fair value of $20,000. Required: Prepare Peter's general journal entry for the cash purchase of Salim's net assets.arrow_forwardSeptember 1, 2020, Winans Corporation acquired Aumont Enterprises for a cash payment of $700,000. At the time of purchase, Aumont's balance sheet showed assets of $620,000, liabilities of $200,000, and owners' equity of $420,000. The fair value of Aumont's assets is estimated to be $800,000. Compute the amount of goodwill recorded by Winans in the acquisition.arrow_forward
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