Question

Princeton Company acquired 75 percent of the common stock of Sheffield Corporation on December 31, 2011....

Princeton Company acquired 75 percent of the common stock of Sheffield Corporation on December 31, 2011. On the date of acquisition, Princeton held land with a book value of $150,000 and a fair value of $300,000; Sheffield held land with a book value of $100,000 and fair value of $500,000. What amount would land be reported in the consolidated balance sheet prepared immediately after the combination?

a.$650,000

b.$500,000

c.$550,000

d.$375,000

On January 1, 2011, Primer Corporation acquired 80 percent of Sutter Corporation's voting common stock. Sutters's buildings and equipment had a book value of $300,000 and a fair value of $350,000 at the time of acquisition. At what amount will Sutter’s buildings and equipment will be reported in the consolidated statements ?

a.

$280,000
b.

$340,000
c.

$300,000
d.

$350,000

P Company purchased the net assets of S Company for $225,000. On the date of P's purchase, S Company had no investments in marketable securities and $30,000 (book and fair value) of liabilities. The fair values of S Company's assets, when acquired, were

Currentassets      $120,000

Noncurrentassets   180,000

Total    $300,000

How should the $45,000 difference between the fair value of the net assets acquired ($270,000) and the consideration paid ($225,000) be accounted for by P Company?

a.

An ordinary gain of $45,000 should be recorded.
b.

The $45,000 difference should be credited to retained earnings.
c.

The current assets should be recorded at $102,000, and the noncurrent assets should be recorded at $153,000.
d.

The noncurrent assets should be recorded at $ 135,000.
Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

1. Answer is a.$650,000

Land to be reported in the consolidated balance sheet = Book value of the parent company + Fair value of the subsidiary company = $150,000 + $500,000 = $650,000

2. Answer is d.$350,000

Sutter's building and equipment will be reported in the Consolidated statement should be the 'Fair value of the assets'. Hence, amount building and equipment to be reported is $350,000

3. Answer is d. The non-current assets should be recorded at $135,000

Net assets of S company = $ 270,000. It should be the acquisition cost of P company. Instead of $270,000 P company paid $225,000. The difference of $45,000 due to reduction of fair value of the S company's non-current assets.

Hence non-current assets should be recorded at $135,000 by reducing $45,000 from total non-current assets of $180,0000

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Hamlen Corporation acquired 100 percent of Pink's Company's common stock on January 1, 2015. Balance sheet...
Hamlen Corporation acquired 100 percent of Pink's Company's common stock on January 1, 2015. Balance sheet data for the two companies immediately following the acquisition follow: .....................................................Hamlen.................. Pink's Cash.............................................$ 30,000 ..............$25,000 Accounts Receivable........................... 80,000 ................40,000 Inventory........................................ 150,000............... 55,000 Land.............................................. 65,000 ................40,000 Buildings and Equipment...................... 260,000............. 160,000 Less: Accumulated Depreciation............ (120,000)............. (50,000) Investment in Pong Company Stock.......... 150,000 Total Assets...................................... $615,000 ........$270,000 Accounts Payable...............................$ 45,000.......... $ 33,000 Taxes Payable.................................... 20,000............... 8,000 Bonds Payable ................................... 200,000........... 100,000 Common Stock..................................... 50,000 ............20,000 Retained...
2- Dubai Corporation acquired 100 percent of Sharjah Company's common stock on January 1, 2019. Balance...
2- Dubai Corporation acquired 100 percent of Sharjah Company's common stock on January 1, 2019. Balance sheet data for the two companies immediately following the acquisition follows: Item Dubai Corporation Sharjah Company Cash $ 30,000 $ 25,000 Accounts Receivable 80,000 40,000 Inventory 150,000 55,000 Land 65,000 40,000 Buildings and Equipment 260,000 160,000 Less: Accumulated Depreciation (120,000 ) (50,000 ) Investment in Spin Company Stock 150,000 Total Assets $ 615,000 $ 270,000 Accounts Payable $45,000 $33,000 Taxes Payable 20,000 8,000 Bonds...
Hamlen Corporation acquired 100 percent of Pink's Company's common stock on January 1, 2015. Balance sheet...
Hamlen Corporation acquired 100 percent of Pink's Company's common stock on January 1, 2015. Balance sheet data for the two companies immediately following the acquisition follow: .....................................................Hamlen.................. Pink's Cash.............................................$ 30,000 ..............$25,000 Accounts Receivable........................... 80,000 ................40,000 Inventory........................................ 150,000............... 55,000 Land.............................................. 65,000 ................40,000 Buildings and Equipment...................... 260,000............. 160,000 Less: Accumulated Depreciation............ (120,000)............. (50,000) Investment in Pong Company Stock.......... 150,000 Total Assets...................................... $615,000 ........$270,000 Accounts Payable...............................$ 45,000.......... $ 33,000 Taxes Payable.................................... 20,000............... 8,000 Bonds Payable ................................... 200,000........... 100,000 Common Stock..................................... 50,000 ............20,000 Retained...
2- Dubai Corporation acquired 100 percent of Sharjah Company's common stock on January 1, 2019. Balance...
2- Dubai Corporation acquired 100 percent of Sharjah Company's common stock on January 1, 2019. Balance sheet data for the two companies immediately following the acquisition follows: Item Dubai Corporation Sharjah Company Cash $ 30,000 $ 25,000 Accounts Receivable 80,000 40,000 Inventory 150,000 55,000 Land 65,000 40,000 Buildings and Equipment 260,000 160,000 Less: Accumulated Depreciation (120,000 ) (50,000 ) Investment in Spin Company Stock 150,000 Total Assets $ 615,000 $ 270,000 Accounts Payable $45,000 $33,000 Taxes Payable 20,000 8,000 Bonds...
On August 1, Year 5, A Company acquired 70 Percent of the common shares of C...
On August 1, Year 5, A Company acquired 70 Percent of the common shares of C Company for $700,000. On that date, the fair value of C’s identifiable net assets was $600,000 and the book value of its shareholders’ equity was $500,000 Assume that fair value enterprise method will be used for valuation of subsidiary. What amount of non-controlling interest should be reported on the balance sheet on the date of acquisition? $0 $150,000 $180,000 $300,000 Assume that Identifiable net...
On August 1, Year 5, A Company acquired 70 Percent of the common shares of C...
On August 1, Year 5, A Company acquired 70 Percent of the common shares of C Company for $700,000. On that date, the fair value of C’s identifiable net assets was $600,000 and the book value of its shareholders’ equity was $500,000 Assume that fair value enterprise method will be used for valuation of subsidiary. What amount of non-controlling interest should be reported on the balance sheet on the date of acquisition? $0 $150,000 $180,000 $300,000 Assume that Identifiable net...
Pinacho Company acquired 80 percent of the stock of Sabastian Corp. on December 31, 2008. The...
Pinacho Company acquired 80 percent of the stock of Sabastian Corp. on December 31, 2008. The stockholder's equity section of Sabastian's balance sheet at that date amounted to $1,200,000 Pinacho financed the acquisition by using $720,000 cash and giving a note payable for $304,000. Book value approximated fair value for all of Sabastian's assets and liabilities except for land which had a fair value $20,000 more than its book value, and for buildings which had a fair value $35,000 more...
Phone Corporation acquired 70 percent of Smart Corporation’s common stock on December 31, 20X4, for $93,800....
Phone Corporation acquired 70 percent of Smart Corporation’s common stock on December 31, 20X4, for $93,800. At that date, the fair value of the noncontrolling interest was $40,200. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition: Phone Smart Item Corporation Corporation Cash $ 59,300 $ 24,000 Accounts Receivable 91,000 53,000 Inventory 130,000 78,000 Land 62,000 39,000 Buildings & Equipment 410,000 253,000 Less: Accumulated Depreciation (151,000 ) (74,000 ) Investment...
Phone Corporation acquired 70 percent of Smart Corporation’s common stock on December 31, 20X4, for $98,000....
Phone Corporation acquired 70 percent of Smart Corporation’s common stock on December 31, 20X4, for $98,000. At that date, the fair value of the noncontrolling interest was $42,000. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition: Phone Smart Item Corporation Corporation Cash $ 62,300 $ 21,000 Accounts Receivable 95,000 51,000 Inventory 136,000 90,000 Land 71,000 39,000 Buildings & Equipment 425,000 254,000 Less: Accumulated Depreciation (162,000 ) (79,000 ) Investment...
Please explain the answers. On December 31, 20X8, Polaris Corporation acquired 100 percent ownership of Star...
Please explain the answers. On December 31, 20X8, Polaris Corporation acquired 100 percent ownership of Star Corporation. On that date, Star reported assets and liabilities with book values of $300,000 and $100,000, respectively, common stock outstanding of $50,000, and retained earnings of $150,000. The book values and fair values of Star's assets and liabilities were identical except for land which had increased in value by $10,000 and inventories which had decreased by $5,000. Based on the preceding information, what amount...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT