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 7, Problem 7.8.2P
To determine
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 entries on Company B’s books to reflect the sale of its investment in Company Z common stock on January 1, 2019.
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Students have asked these similar questions
Exercise 7-13: On October 1, 2016, Chicago Corp. purchases 1,000 shares of the preferred stock of Denver Corp. for $40 per share. Chicago pays another $1,000 in commissions. On October 20, 2016, Denver declares and pays dividends of $1 per share. Chicago sells the stock on November 5, 2016, at a price of $45 per share.Prepare all necessary journal entries on Chicago’s books in connection with its investment, beginning with the purchase of the preferred stock on October 1, 2016; the dividend received on October 20, 2016; and the sale on November 5, 2016.
Exercise 7-14: On August 15, 2016, Cubs Corp. purchases 5,000 shares of common stock in Sox Inc. at a market price of $15 per share. In addition, Cubs pays brokerage fees of $1,000. On October 20, 2016, Cubs sells the Sox stocks for $10 per share.
Prepare all necessary entries on Cub’s books in connection with the investment beginning with the purchase of the common stock on August 15, 2016, and the sale on October 20, 2016.
Question 5
On January 2, 2020, Theodora Company purchased 40,000 shares of Byzantine, Inc. stock at P100 per share. Brokerage fees amounted to P120,000. A P5 dividend per share of Byzantine, Inc. shares had been declared on December 15, 2019, to be paid on March 31, 2020 to shareholders of record on January 31, 2020. The shares are designated as FVTOCI. On December 31, 2020 the investment has a fair value of P4,200,000. How much should be recognized in the 2020 other comprehensive income related to these securities?
Group of answer choices
P400,000
P200,000
P80,000
P280,000
Chapter 7 Solutions
Advanced Accounting
Ch. 7 - Prob. 1UTICh. 7 - Prob. 2UTICh. 7 - Prob. 3UTICh. 7 - Prob. 4UTICh. 7 - Exercise 1 (LO 1) Purchase of shares directly from...Ch. 7 - Prob. 2ECh. 7 - Prob. 3ECh. 7 - Prob. 4ECh. 7 - Prob. 5ECh. 7 - Prob. 6E
Ch. 7 - Prob. 7.1ECh. 7 - Exercise 7 (LO 4) Equity adjustments with...Ch. 7 - Prob. 8.1ECh. 7 - Prob. 8.2ECh. 7 - Prob. 8.3ECh. 7 - Prob. 7.1.1PCh. 7 - Prob. 7.1.2PCh. 7 - Prob. 7.2.1PCh. 7 - Prob. 7.2.2PCh. 7 - Prob. 7.2.3PCh. 7 - Prob. 7.2.4PCh. 7 - Problem 7-4 (LO 3) Sale of partial, then balance...Ch. 7 - Prob. 7.5PCh. 7 - Prob. 7.7.1PCh. 7 - Prob. 7.8.2PCh. 7 - Prob. 7A.1APCh. 7 - Prob. 7A.2.1APCh. 7 - Prob. 7A.2.2AP
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