Concept explainers
Business combination:
Business combination refers to the combining of one or more business organizations in a single entity. The business combination leads to the formation of combined financial statements. After business combination, the entities having separate control merges into one having control over all the assets and liabilities. Merging and acquisition are types of business combinations.
Consolidated financial statements:
The consolidated financial statements refer to the combined financial statements of the entities which are prepared at the year-end. The consolidated financial statements are prepared when one organization is either acquired by the other entity or two organizations merged to form the new entity. The consolidated financial statements serve the purpose of both the entities about financial information.
Value analysis:
The value analysis in a business combination is an essential part of determining the worth of the acquired entity. The
:
Prepare the determination and distribution of excess schedule and record the sale of shares of Company V.
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Advanced Accounting
- LO.3 Renata Corporation purchased equipment in 2017 for 180,000 and has taken 83,000 of regular MACRS depreciation. Renata Corporation sells the equipment in 2019 for 110,000. What is the amount and character of Renatas gain or loss?arrow_forwardSubject: Corporate Accounting Q) On 1 July 2016 Liala Ltd sold an item of plant to Jordan Ltd for $450000 when its’ carrying value in Liala Ltd book was $600000 (costs $900000, accumulated depreciation $300000). This plant has a remaining useful life of five (5) years form the date of sale. The group measures its property plants and equipment using a costs model. Tax rate is 30 percent. Required:Pass the necessary entries on 30 June 2017 and 30 June 2018 to eliminate the intra-group transfer of equipment.arrow_forwardT1. Account Park Company acquires an 85% interest in Sunland Company on January 2, 2015. The resulting difference between book value and the value implied by the purchase price in the amount of $113,400 is entirely attributable to equipment with an original life of 15 years and a remaining useful life, on January 2, 2015, of 10 years. Prepare the December 31 consolidated financial statements workpaper entries for 2015 and 2016 to allocate and depreciate the difference between book value and the value implied by the purchase price, recording accumulated depreciation as a separate balance. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit 2015 2016 Click if you would like to Show Work for this question:arrow_forward
- 5 On December 31, 2024, the end of the fiscal year, California Microtech Corporation completed the sale of its semiconductor business for $15 million. The semiconductor business segment qualifies as a component of the entity according to GAAP. Consider the following additional information. 2 points eBook Print References The book value of the assets of the segment at the time of the sale was $12 million. The loss from operations of the segment during 2024 was $4.5 million. Pretax income from other continuing operations for the year totaled $6.6 million. . The income tax rate is 25%. . · ● Prepare the lower portion of the 2024 income statement beginning with income from continuing operations before income taxes. Note: Loss amounts should be indicated with a minus sign. Enter your answers in whole dollars and not in millions. For example, $4,000,000 rather than $4. CALIFORNIA MICROTECH CORPORATION Partial Income Statement For the Year Ended December 31, 2024 Income from continuing…arrow_forwardPlease help me solve questions 1 2 & 3. Thank you! Placid Lake Corporation acquired 70 percent of the outstanding voting stock of Scenic, Inc., on January 1, 2017, when Scenic had a net book value of $440,000. Any excess fair value was assigned to intangible assets and amortized at a rate of $7,000 per year. Placid Lake's 2018 net income before consideration of its relationship with Scenic (and before adjustments for intra-entity sales) was $340,000. Scenic reported net income of $150,000. Placid Lake declared $140,000 in dividends during this period; Scenic paid $44,000. At the end of 2018, selected figures from the two companies' balance sheets were as follows: Placid Lake Scenic Inventory $ 180,000 $ 94,000 Land 640,000 240,000 Equipment (net) 440,000 340,000 During 2017, intra-entity sales of $95,000 (original cost of $50,000) were made. Only 10 percent of this inventory was still held within the consolidated entity at the end of…arrow_forward4. Enron Company decided on August 1, 2011 to dispose of a component of its business. The component was sold on November 30, 2011. Enron's income for 2011 included income of P5,000,000 from operating the discontinued segment from January 1 to the sale date. Enron incurred a loss on the November 30 sale of P4,500,000. Ignoring income tax, what amount should be reported in the 2011 income statement as income or loss under "discontinued operation"? a. 4,500,000 loss b. 5,000,000 income c. 500,000 loss d. 500,000 incomearrow_forward
- Question 3) On January 1, 2018, Jebreen Corp. acquired a 35% interest in Mirani Inc. for $290,000 in cash. On that date, Mirani Inc’s balance sheet disclosed net assets of $480,000. It also had an equipment that was undervalued in its books by $90,000 (remaining useful life is 20 years). It had also a building that was overvalued by $30,000 (remaining useful life is 15 years). Jebreen Corp. records the purchase based on the equity method. By the end of 2018, Mirani Inc. reported total inventory of $150,000. Out of this amount, 30% represented the remaining amount of an inventory that was purchased from Jebreen Corp during 2018. Mirani Inc. plans to sell this inventory in 2019. Assume that Mirani Inc. sold 80% of the total inventory purchased from Jebreen Corp. during 2018 in the same year. Assume further that, Jebreen Corp sold the inventory to Mirani Inc. at a markup of 50% of cost. During 2019, Mirani Inc. reported net income of $120,000 and declared and paid cash dividends of…arrow_forward2.1. Nyhiraba Limited purchased an asset on 1st January 2015 for an amount of R5 million. The assethas an economic useful life of 10 years for which the company uses to generate operational income.On 1st July 2018, the asset’s fair value was R3.8 million, and the cost to sell was estimated at R800,000.The asset’s value in use on that date was valued at R2.95 million. Determine whether the asset isimpaired or not under IAS 36. Justify your answer with calculations and an explanation.arrow_forwardQuestion. On June 28 Lexicon Corporation acquired 100% of the common stock of Gulf & Eastern. The purchase price allocation included the following items: $4 million, patent; $3 million, developed technology; $2 million, in-process research and development; $5 million, goodwill. Lexicon’s policy is to amortize intangible assets using the straight-line method, no residual value, and a five-year useful life. What is the total amount of expenses (ignoring taxes) that would appear in Lexicon’s income statement for the year ended December 31 related to these items?arrow_forward
- Question 5 Week 9 (a) Jessica Ltd sold inventory during the current period to its wholly owned subsidiary, Amelie Ltd, for $15 000. These items previously cost Jessica Ltd $12 000. Amelie Ltd subsequently sold half the items to Ningbo Ltd for $8000. The tax rate is 30%. The group accountant for Jessica Ltd, Li Chen, maintains that the appropriate consolidation adjustment entries are as follows: Sales Dr. 15000 Cost of Sales Cr.13000 Inventory Cr. 2000 Deferred Tax asset Dr.300 Income Tax Expenses Cr.300 Required (i) Discuss whether the entries suggested by Li Chen are correct, explaining on a line-by-line basis the correct adjustment entry. (ii) Determine the consolidation worksheet entries in the following year, assuming the inventory has been –sold, and explain the adjustments on a line-by-line basis.arrow_forward12. On May 1, Foxtrot Co. agreed to sell the assets of its Footwear Division to Albanese Inc. for $80 million. The sale was completed on December 31, 2021. The following additional facts pertain to the transaction: The Footwear Division qualifies as a component of the entity according to GAAP regarding discontinued operations. The book value of Footwear's assets totaled $48 million on the date of the sale. Footwear's operating income was a pre-tax loss of $10 million in 2021. Foxtrot's income tax rate is 25%. In the income statement for the year ended December 31, 2021, Foxtrot Co. would report: Multiple Choice All income taxes combined into one line item. Income taxes separated for continuing and discontinued operations. Income taxes reported for income and gains only. None of these answer choices are correct.arrow_forwardIntermediate Accounting ll ch 16 On January 1, 2021, Ameen Company purchased major pieces of manufacturing equipment for a total of $54 million. Ameen uses straight-line depreciation for financial statement reporting and deducted 100% of the equipment’s cost for income tax reporting in 2021. At December 31, 2023, the book value of the equipment was $45 million. At December 31, 2024, the book value of the equipment was $42 million. There were no other temporary differences and no permanent differences. Pretax accounting income for 2024 was $72 million. Required: Prepare the appropriate journal entry to record Ameen’s 2024 income taxes. Assume an income tax rate of 20%. What is Ameen’s 2024 net income?arrow_forward
- Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT