Book value: Book value of the asset is found out after deducting accumulated depreciation from the recorded value of the asset. Recorded value is the value at asset enters the books of account of the organization. The fair value of the asset: The fair value of the asset is the amount at which two parties may enter into an agreement with open hand. Cash flow: Cash flow is the receipt or payment by the organization. It may be related to the current period or any other period. It shows the cash position of the organization. Cash flow from operating activities: Cash flow from the operating activities shows the receipt and payment regarding the business activity only. Cash flow from investing activities: Cash flow from the investing activities shows the receipt and payment regarding the investment activity only. Cash flow from financing activities: Cash flow from the financing activities shows the receipt and payment regarding the financing activity only. Cash flow statement: Cash flow statement is a statement that reports the cash inflow or outflow in the operating, investing, and financing activities of a company for a particular period. This statement represents the sources and applications or uses of cash. Statement of cash flows tells about the liquidity position of the company. It tells about the amount of cash that is available to meet the obligations of the company. The effect of given transaction on the cash flow statement of the consolidated firm in the period of the purchase if Company P pays $640,000 cash to purchase the stock.

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Answer 1

Question

Chapter 6, Problem 3UTI

a.

To determine

Book value:

Book value of the asset is found out after deducting accumulated depreciation from the recorded value of the asset. Recorded value is the value at asset enters the books of account of the organization.

The fair value of the asset:

The fair value of the asset is the amount at which two parties may enter into an agreement with open hand.

Cash flow:

Cash flow is the receipt or payment by the organization. It may be related to the current period or any other period. It shows the cash position of the organization.

Cash flow from operating activities:

Cash flow from the operating activities shows the receipt and payment regarding the business activity only.

Cash flow from investing activities:

Cash flow from the investing activities shows the receipt and payment regarding the investment activity only.

Cash flow from financing activities:

Cash flow from the financing activities shows the receipt and payment regarding the financing activity only.

Cash flow statement:

Cash flow statement is a statement that reports the cash inflow or outflow in the operating, investing, and financing activities of a company for a particular period. This statement represents the sources and applications or uses of cash. Statement of cash flows tells about the liquidity position of the company. It tells about the amount of cash that is available to meet the obligations of the company.

The effect of given transaction on the cash flow statement of the consolidated firm in the period of the purchase if Company P pays $640,000 cash to purchase the stock.

To determine

Cash flow from investing activities:

Cash flow from the investing activities shows the receipt and payment regarding the investment activity only.

To explain:

The effect of given transaction on the cash flow statement of the consolidated firm in the period of the purchase if Company P pays $400,000 cash and signs a 5-year note for $240,000.

c.

To determine

Cash flow from investing activities:

Cash flow from the investing activities shows the receipt and payment regarding the investment activity only.

The effect of given transaction on the cash flow statement of the consolidated firm in the period of the purchase if Company P exchanges only common stock with the shareholders of Company S.

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Plaza, Inc., acquires 80 percent of the outstanding common stock of Stanford Corporation on January 1, 2021, in exchange for $900,000 cash. At the acquisition date, Stanford’s total fair value, including the noncontrolling interest, was assessed at $1,125,000. Also at the acquisition date, Stanford's book value was $690,000. Several individual items on Stanford’s financial records had fair values that differed from their book values as follows: Book Value Fair Value Trade names (indefinite life) $ 360,000 $ 383,000 Property and equipment (net, 8-year remaining life) 290,000 330,000 Patent (14-year remaining life) 132,000 272,000 For internal reporting purposes, Plaza, Inc., employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2021, for both companies. Plaza Stanford Revenues $ (1,400,000 ) $ (825,000 ) Cost of goods sold 774,000 395,750…

Plaza, Inc., acquires 80 percent of the outstanding common stock of Stanford Corporation on January 1, 2018, in exchange for $900,000 cash. At the acquisition date, Stanford’s total fair value, including the noncontrolling interest, was assessed at $1,125,000. Also at the acquisition date, Stanford’s book value was $690,000.Several individual items on Stanford’s financial records had fair values that differed from their book values as follows:For internal reporting purposes, Plaza, Inc., employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2018, for both companies.At year-end, there were no intra-entity receivables or payables.Prepare a worksheet to consolidate the financial statements of Plaza, Inc., and its subsidiary Stanford.

Plaza, Incorporated, acquires 80 percent of the outstanding common stock of Stanford Corporation on January 1, 2024, in exchange for $941, 800 cash. At the acquisition date, Stanford's total fair value, including the noncontrolling interest, was assessed at $1,177,250. Also at the acquisition date, Stanford's book value was $546, 100. Several individual items on Stanford's financial records had fair values that differed from their book values as follows: Items Book Value Fair Value Trade names (indefinite life) $ 300, 900 $ 360, 900 Property and equipment (net, 8-year remaining life) 233, 600 262, 400 Patent (14-year remaining life) 120, 900 154, 500 For internal reporting purposes, Plaza, Incorporated, employs the equity method to account for this investment. The following account balances are for the year ending December 31, 2024, for both companies. Accounts Plaza Stanford Revenues $ (795, 100) $ (782,600) Cost of goods sold 439, 600 331, 000 Depreciation expense 186, 400 29, 200…

Answer 2

Question

Chapter 6, Problem 3UTI

a.

To determine

Book value:

Book value of the asset is found out after deducting accumulated depreciation from the recorded value of the asset. Recorded value is the value at asset enters the books of account of the organization.

The fair value of the asset:

The fair value of the asset is the amount at which two parties may enter into an agreement with open hand.

Cash flow:

Cash flow is the receipt or payment by the organization. It may be related to the current period or any other period. It shows the cash position of the organization.

Cash flow from operating activities:

Cash flow from the operating activities shows the receipt and payment regarding the business activity only.

Cash flow from investing activities:

Cash flow from the investing activities shows the receipt and payment regarding the investment activity only.

Cash flow from financing activities:

Cash flow from the financing activities shows the receipt and payment regarding the financing activity only.

Cash flow statement:

Cash flow statement is a statement that reports the cash inflow or outflow in the operating, investing, and financing activities of a company for a particular period. This statement represents the sources and applications or uses of cash. Statement of cash flows tells about the liquidity position of the company. It tells about the amount of cash that is available to meet the obligations of the company.

The effect of given transaction on the cash flow statement of the consolidated firm in the period of the purchase if Company P pays $640,000 cash to purchase the stock.

To determine

Cash flow from investing activities:

Cash flow from the investing activities shows the receipt and payment regarding the investment activity only.

To explain:

The effect of given transaction on the cash flow statement of the consolidated firm in the period of the purchase if Company P pays $400,000 cash and signs a 5-year note for $240,000.

c.

To determine

Cash flow from investing activities:

Cash flow from the investing activities shows the receipt and payment regarding the investment activity only.

The effect of given transaction on the cash flow statement of the consolidated firm in the period of the purchase if Company P exchanges only common stock with the shareholders of Company S.

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Answer 3

Question

Chapter 6, Problem 3UTI

a.

To determine

Book value:

Book value of the asset is found out after deducting accumulated depreciation from the recorded value of the asset. Recorded value is the value at asset enters the books of account of the organization.

The fair value of the asset:

The fair value of the asset is the amount at which two parties may enter into an agreement with open hand.

Cash flow:

Cash flow is the receipt or payment by the organization. It may be related to the current period or any other period. It shows the cash position of the organization.

Cash flow from operating activities:

Cash flow from the operating activities shows the receipt and payment regarding the business activity only.

Cash flow from investing activities:

Cash flow from the investing activities shows the receipt and payment regarding the investment activity only.

Cash flow from financing activities:

Cash flow from the financing activities shows the receipt and payment regarding the financing activity only.

Cash flow statement:

Cash flow statement is a statement that reports the cash inflow or outflow in the operating, investing, and financing activities of a company for a particular period. This statement represents the sources and applications or uses of cash. Statement of cash flows tells about the liquidity position of the company. It tells about the amount of cash that is available to meet the obligations of the company.

The effect of given transaction on the cash flow statement of the consolidated firm in the period of the purchase if Company P pays $640,000 cash to purchase the stock.

To determine

Cash flow from investing activities:

Cash flow from the investing activities shows the receipt and payment regarding the investment activity only.

To explain:

The effect of given transaction on the cash flow statement of the consolidated firm in the period of the purchase if Company P pays $400,000 cash and signs a 5-year note for $240,000.

c.

To determine

Cash flow from investing activities:

Cash flow from the investing activities shows the receipt and payment regarding the investment activity only.

The effect of given transaction on the cash flow statement of the consolidated firm in the period of the purchase if Company P exchanges only common stock with the shareholders of Company S.

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Answer 4

Question

Chapter 6, Problem 3UTI

a.

To determine

Book value:

Book value of the asset is found out after deducting accumulated depreciation from the recorded value of the asset. Recorded value is the value at asset enters the books of account of the organization.

The fair value of the asset:

The fair value of the asset is the amount at which two parties may enter into an agreement with open hand.

Cash flow:

Cash flow is the receipt or payment by the organization. It may be related to the current period or any other period. It shows the cash position of the organization.

Cash flow from operating activities:

Cash flow from the operating activities shows the receipt and payment regarding the business activity only.

Cash flow from investing activities:

Cash flow from the investing activities shows the receipt and payment regarding the investment activity only.

Cash flow from financing activities:

Cash flow from the financing activities shows the receipt and payment regarding the financing activity only.

Cash flow statement:

Cash flow statement is a statement that reports the cash inflow or outflow in the operating, investing, and financing activities of a company for a particular period. This statement represents the sources and applications or uses of cash. Statement of cash flows tells about the liquidity position of the company. It tells about the amount of cash that is available to meet the obligations of the company.

The effect of given transaction on the cash flow statement of the consolidated firm in the period of the purchase if Company P pays $640,000 cash to purchase the stock.

To determine

Cash flow from investing activities:

Cash flow from the investing activities shows the receipt and payment regarding the investment activity only.

To explain:

The effect of given transaction on the cash flow statement of the consolidated firm in the period of the purchase if Company P pays $400,000 cash and signs a 5-year note for $240,000.

c.

To determine

Cash flow from investing activities:

Cash flow from the investing activities shows the receipt and payment regarding the investment activity only.

The effect of given transaction on the cash flow statement of the consolidated firm in the period of the purchase if Company P exchanges only common stock with the shareholders of Company S.

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Answer 5

Chapter 6, Problem 3UTI

a.

To determine

Book value:

Book value of the asset is found out after deducting accumulated depreciation from the recorded value of the asset. Recorded value is the value at asset enters the books of account of the organization.

The fair value of the asset:

The fair value of the asset is the amount at which two parties may enter into an agreement with open hand.

Cash flow:

Cash flow is the receipt or payment by the organization. It may be related to the current period or any other period. It shows the cash position of the organization.

Cash flow from operating activities:

Cash flow from the operating activities shows the receipt and payment regarding the business activity only.

Cash flow from investing activities:

Cash flow from the investing activities shows the receipt and payment regarding the investment activity only.

Cash flow from financing activities:

Cash flow from the financing activities shows the receipt and payment regarding the financing activity only.

Cash flow statement:

Cash flow statement is a statement that reports the cash inflow or outflow in the operating, investing, and financing activities of a company for a particular period. This statement represents the sources and applications or uses of cash. Statement of cash flows tells about the liquidity position of the company. It tells about the amount of cash that is available to meet the obligations of the company.

The effect of given transaction on the cash flow statement of the consolidated firm in the period of the purchase if Company P pays $640,000 cash to purchase the stock.

To determine

Cash flow from investing activities:

Cash flow from the investing activities shows the receipt and payment regarding the investment activity only.

To explain:

The effect of given transaction on the cash flow statement of the consolidated firm in the period of the purchase if Company P pays $400,000 cash and signs a 5-year note for $240,000.

c.

To determine

Cash flow from investing activities:

Cash flow from the investing activities shows the receipt and payment regarding the investment activity only.

The effect of given transaction on the cash flow statement of the consolidated firm in the period of the purchase if Company P exchanges only common stock with the shareholders of Company S.

Answer 6

Chapter 6, Problem 3UTI

a.

To determine

Book value:

Book value of the asset is found out after deducting accumulated depreciation from the recorded value of the asset. Recorded value is the value at asset enters the books of account of the organization.

The fair value of the asset:

The fair value of the asset is the amount at which two parties may enter into an agreement with open hand.

Cash flow:

Cash flow is the receipt or payment by the organization. It may be related to the current period or any other period. It shows the cash position of the organization.

Cash flow from operating activities:

Cash flow from the operating activities shows the receipt and payment regarding the business activity only.

Cash flow from investing activities:

Cash flow from the investing activities shows the receipt and payment regarding the investment activity only.

Cash flow from financing activities:

Cash flow from the financing activities shows the receipt and payment regarding the financing activity only.

Cash flow statement:

Cash flow statement is a statement that reports the cash inflow or outflow in the operating, investing, and financing activities of a company for a particular period. This statement represents the sources and applications or uses of cash. Statement of cash flows tells about the liquidity position of the company. It tells about the amount of cash that is available to meet the obligations of the company.

The effect of given transaction on the cash flow statement of the consolidated firm in the period of the purchase if Company P pays $640,000 cash to purchase the stock.

Answer 7

Chapter 6, Problem 3UTI

a.

To determine

Book value:

Book value of the asset is found out after deducting accumulated depreciation from the recorded value of the asset. Recorded value is the value at asset enters the books of account of the organization.

The fair value of the asset:

The fair value of the asset is the amount at which two parties may enter into an agreement with open hand.

Cash flow:

Cash flow is the receipt or payment by the organization. It may be related to the current period or any other period. It shows the cash position of the organization.

Cash flow from operating activities:

Cash flow from the operating activities shows the receipt and payment regarding the business activity only.

Cash flow from investing activities:

Cash flow from the investing activities shows the receipt and payment regarding the investment activity only.

Cash flow from financing activities:

Cash flow from the financing activities shows the receipt and payment regarding the financing activity only.

Cash flow statement:

Cash flow statement is a statement that reports the cash inflow or outflow in the operating, investing, and financing activities of a company for a particular period. This statement represents the sources and applications or uses of cash. Statement of cash flows tells about the liquidity position of the company. It tells about the amount of cash that is available to meet the obligations of the company.

The effect of given transaction on the cash flow statement of the consolidated firm in the period of the purchase if Company P pays $640,000 cash to purchase the stock.

Answer 8

To determine

Cash flow from investing activities:

Cash flow from the investing activities shows the receipt and payment regarding the investment activity only.

To explain:

The effect of given transaction on the cash flow statement of the consolidated firm in the period of the purchase if Company P pays $400,000 cash and signs a 5-year note for $240,000.

Answer 9

To determine

Cash flow from investing activities:

Cash flow from the investing activities shows the receipt and payment regarding the investment activity only.

To explain:

The effect of given transaction on the cash flow statement of the consolidated firm in the period of the purchase if Company P pays $400,000 cash and signs a 5-year note for $240,000.

Answer 10

c.

To determine

Cash flow from investing activities:

Cash flow from the investing activities shows the receipt and payment regarding the investment activity only.

The effect of given transaction on the cash flow statement of the consolidated firm in the period of the purchase if Company P exchanges only common stock with the shareholders of Company S.

Answer 11

c.

To determine

Cash flow from investing activities:

Cash flow from the investing activities shows the receipt and payment regarding the investment activity only.

The effect of given transaction on the cash flow statement of the consolidated firm in the period of the purchase if Company P exchanges only common stock with the shareholders of Company S.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 6 - Prob. 1UTI Ch. 6 - Prob. 2UTI Ch. 6 - Prob. 3UTI Ch. 6 - Prob. 4UTI Ch. 6 - Prob. 5UTI Ch. 6 - Prob. 6UTI Ch. 6 - Prob. 7UTI Ch. 6 - Prob. 1E Ch. 6 - Prob. 2E Ch. 6 - Prob. 3E

Solution Summary: The author explains that the book value of an asset is determined after deducting accumulated depreciation from the recorded value. The cash flow statement is a statement that reports the cash inflow or outflow in the operating,

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