Cornerstones of Financial Accounting
4th Edition
ISBN: 9781337690881
Author: Jay Rich, Jeff Jones
Publisher: Cengage Learning
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Chapter A2, Problem 29E
To determine
(a)
Introduction:
When a company holds 50% or more of the common stock of another company then both the companies are treated as a single entity. In such a case, consolidated statements are prepared.
To calculate:
Income from investment in J Co.
To determine
(b)
Introduction:
When a company holds 50% or more of the common stock of another company then both the companies are treated as a single entity. In such a case, consolidated statements are prepared.
To calculate:
Net Income of S Co.
To determine
(c)
Introduction:
When a company holds 50% or more of the common stock of another company then both the companies are treated as a single entity. In such a case, consolidated statements are prepared.
To prepare:
Consolidated Income Statement.
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Business Combination - Accounting for an acquirer)
On 1 July 2020, B Ltd acquired all the assets and liabilities of P Ltd. In exchange for these assets and liabilities, Brad Ltd issued 100,000 shares that at date of issue had a fair value of $4.50 per share. Costs of issuing these shares amounted to $2,000. Legal costs associated with the acquisition of Pitt Ltd amounted to $3,200.
The asset and liabilities of P Ltd at 1 July 2020 were as follows (Extract):
Assets
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Account Receivable
12 000
$ 12 000
Inventories
63 000
69 000
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330 000
225 000
Accumulated Depreciation – plant and Equipment
(100 000)
-
Land
200 000
280 000
Liabilities
Accounts payable
22 000
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Debentures
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prepare the journal entries in the records of B Ltd at 1 July 2020.
Business Combination - Accounting for an acquirer)
On 1 July 2020, B Ltd acquired all the assets and liabilities of P Ltd. In exchange for these assets and liabilities, Brad Ltd issued 100,000 shares that at date of issue had a fair value of $4.50 per share. Costs of issuing these shares amounted to $2,000. Legal costs associated with the acquisition of Pitt Ltd amounted to $3,200.
The asset and liabilities of P Ltd at 1 July 2020 were as follows (Extract):
Assets
Carrying Amount
Fair Value
Cash
$ 3 000
-
Account Receivable
12 000
$ 12 000
Inventories
63 000
69 000
Plant and equipment
330 000
225 000
Accumulated Depreciation – plant and Equipment
(100 000)
-
Land
200 000
280 000
Liabilities
Accounts payable
22 000
22 000
Debentures
68 000
68 000
Required:
a) Prepare the acquisition analysis at 1 July 2020 for the acquisition of P Ltd by B Ltd. Assume…
4-On January 2, 2019, Moonshine, Inc. acquired Cambridge as a wholly-owned subsidiary, paying an excess of $400,000 over the book value of Hudson's net assets. One-half of the excess was attributable to equipment with a 4-year life, leaving the remainder as goodwill. The parent uses the equity method of pre-consolidation Equity investment bookkeeping. The 2020 financial statements for the two companies are presented below.
Moonshine, Inc.
Cambridge
Sales
$2,500,000
$600,000
Cost of goods sold
-1,800,000
-350,000
Gross profit
700,000
250,000
Operating expenses
-386,000
-82,000
Equity income
118,000
0
Net Income
$432,000
$168,000
Retained Earnings, 1/1/20
$2,400,000
$160,000
Net income
432,000
168,000
Dividends
-103,000
-19,500
Retained Earnings, 12/31/20
$2,729,000
$308,500
Cash and receivables
$1,250,000
$47,500
Inventory
1,540,000
98,000
Equity…
Chapter A2 Solutions
Cornerstones of Financial Accounting
Ch. A2 - How do long-term investments differ from...Ch. A2 - Prob. 2DQCh. A2 - Prob. 3DQCh. A2 - Prob. 4DQCh. A2 - Prob. 5DQCh. A2 - Prob. 6DQCh. A2 - Prob. 7DQCh. A2 - How does the equity method discourage the...Ch. A2 - Prob. 9DQCh. A2 - Prob. 10DQ
Ch. A2 - Prob. 11DQCh. A2 - Prob. 12DQCh. A2 - Prob. 13DQCh. A2 - Prob. 14DQCh. A2 - Prob. 15DQCh. A2 - Prob. 1MCQCh. A2 - Prob. 2MCQCh. A2 - Prob. 3MCQCh. A2 - Prob. 4MCQCh. A2 - Prob. 5MCQCh. A2 - Prob. 6MCQCh. A2 - Prob. 7MCQCh. A2 - Prob. 8MCQCh. A2 - Prob. 9MCQCh. A2 - Prob. 10MCQCh. A2 - Prob. 11MCQCh. A2 - When the market value of a companys...Ch. A2 - Prob. 13MCQCh. A2 - Prob. 14MCQCh. A2 - Prob. 15MCQCh. A2 - Prob. 16MCQCh. A2 - Prob. 17ECh. A2 - Trading Securities Pear Investments began...Ch. A2 - Prob. 19ECh. A2 - Prob. 20ECh. A2 - Adjusting the Allowance to Adjust Trading...Ch. A2 - Prob. 22ECh. A2 - Prob. 23ECh. A2 - Prob. 24ECh. A2 - Prob. 25ECh. A2 - Prob. 26ECh. A2 - Prob. 27ECh. A2 - Prob. 28ECh. A2 - Prob. 29ECh. A2 - Prob. 30E
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