P Company acquired the assets and assumed the liabilities of S Company on January 1, 2018,...

P Company acquired the assets and assumed the liabilities of S Company on January 1, 2018, for $510,000 when S Company's balance sheet was as follows:

S COMPANY Balance Sheet January 1, 2018
Cash	$ 96,000
Receivables	55,200
Inventory	110,400
Land	169,200
Plant and equipment (net)	466,800
Total	$897,600
Accounts payable	$ 44,400
Bonds payable, 10%, due 12/31/2023, Par	480,000
Common stock, $2 par value	120,000
Retained earnings	253,200
Total	$897,600

Fair values of S Company's assets and liabilities were equal to their book values except for the following:

Inventory has a fair value of $126,000.
Land has a fair value of $198,000.
The bonds pay interest semiannually on June 30 and December 31. The current yield rate on bonds of similar risk is 8%.

Prepare the journal entry on P Company's books to record the acquisition of the assets and assumption of the liabilities of S Company.

Expert Solution

Particulars	Debit	Credit
Cash	96,000
Receivables	55,200
Inventory	1,26,000
Land	1,98,000
Plant and equipment (net)	4,66,800
Goodwill	92,400
Accounts payable		44,400
Bonds payable		4,80,000
Cash/Bank		5,10,000
Being consideration paid for acquiring S Company's assets and Liabilities

ekkarill92 answered 1 year ago

Pretzel Company acquired the assets (except for cash) and assumed the liabilities of Salt Company on...

Pretzel Company acquired the assets (except for cash) and assumed the liabilities of Salt Company on January 2, 2020. As compensation, Pretzel Company gave 30,000 shares of its common stock, 15,000 shares of its 10% preferred stock, and cash of $50,000 to the stockholders of Salt Company. On the acquisition date, Pretzel Company stock had the following characteristics: PRETZEL COMPANY Stock Par Value Fair Value Common $ 10 $ 25 Preferred 100 100 Immediately prior to the acquisition, Salt Company's...

Preston Company acquired the assets (except for cash) and assumed the liabilities of Saville Company. Immediately...

Preston Company acquired the assets (except for cash) and assumed the liabilities of Saville Company. Immediately prior to the acquisition, Saville Company’s balance sheet was as follows: Book Value Fair Value Cash $ 120,000 $ 120,000 Receivables (net) 192,000 250,000 Inventory 360,000 400,000 Plant and equipment (net) 480,000 600,000 Land 420,000 600,000 Total assets $1,572,000 $1,944,000 Liabilities $ 540,000 $ 600,000 Common stock ($5 par value) 480,000 Other contributed capital 132,000 Retained earnings 420,000 Total equities $1,572,000 Required: A....

Question 9 P Company acquired 75 percent of S Company on January 1, 2018 at book...

Question 9 P Company acquired 75 percent of S Company on January 1, 2018 at book value. During 2018, S purchased inventory for $40,000 and sold it to P for $60,000. Of this amount, P reported $12,000 in ending inventory in 2018 and later sold it in 2019. In 2019, P sold inventory it had purchased for $35,000 to S for $50,000. S sold $45,000 of this inventory in 2019. In 2019, P reported stand-alone income of $870,000 and S...

On January 1, 2018, Co. P acquired 90% of Co. S for $550,000, plus $15,000 in...

On January 1, 2018, Co. P acquired 90% of Co. S for $550,000, plus $15,000 in acquisition costs. On the date of acquisition, Co. S had the following balance sheet: Assets Liabilities & Equity Accounts Receivable 150,000 Current Liabilities 260,000 Inventory 180,000 Bonds Payable 250,000 Land 200,000 Common Stock, $1 Par 400,000 Buildings 550,000 PIC In Excess of Par 70,000 Acc. Deprecition (Bldg) (100,000) Retained Earnings 300,000 Equipment 400,000 Acc. Depreciation (Equip) (120,000) Goodwill 20,000 Total Assets 1,280,000 Total Liab....

On January 1, 20X2, Prost Company acquired all of SKK Corporation’s assets and liabilities by issuing...

On January 1, 20X2, Prost Company acquired all of SKK Corporation’s assets and liabilities by issuing 24,100 shares of its $6 par value common stock. At that date, Prost shares were selling at $24 per share. Historical cost and fair value balance sheet data for SKK at the time of acquisition were as follows: Balance Sheet Item Historical Cost Fair Value Cash & Receivables $ 24,000 $ 24,000 Inventory 106,000 111,000 Buildings & Equipment 605,000 450,000 Less: Accumulated Depreciation (231,000...

how to recognize and measure identifiable assets acquired and liabilities assumed in business combination ? Explain...

how to recognize and measure identifiable assets acquired and liabilities assumed in business combination ? Explain in around 1500 words

Allerton Company acquires all of Deluxe Company’s assets and liabilities for cash on January 1, 2018,...

Allerton Company acquires all of Deluxe Company’s assets and liabilities for cash on January 1, 2018, and subsequently formally dissolves Deluxe. At the acquisition date, the following book and fair values were available for the Deluxe Company accounts: Book Values Fair Values Current assets $ 61,000 $ 61,000 Building 91,750 44,650 Land 31,000 45,700 Trademark 0 37,600 Goodwill 15,000 ? Liabilities (63,750 ) (63,750 ) Common stock (100,000 ) Retained earnings (35,000 ) 1&2. Prepare Allerton’s entry to record its...

On January 1, 2012, P Corp acquired 80% of the outstanding common stock of S Corp for $820,000. On January 1, 2018, P Corp sold $120,000 of land to S Corp for cash.

On January 1, 2012, P Corp acquired 80% of the outstanding common stock of S Corp for $820,000. On January 1, 2018, P Corp sold $120,000 of land to S Corp for cash. The cost of the land was $50,000 at the date of the transfer. Also on January 1, 2018, P Corp transferred equipment to S Corp for $20,000 cash. The equipment originally cost $26,000 and has a book value of $15,000 (three-year remaining useful life). During 2019,...

Assume that, on January 1, 2019, P Company acquired a 70% interest in its subsidiary, S...

Assume that, on January 1, 2019, P Company acquired a 70% interest in its subsidiary, S Company. The aggregate fair value of the controlling and noncontrolling interest was $400,000 in excess of S Company’s Stockholders’ Equity on the acquisition date. The parent uses the equity method to account for its investment in S company. The parent assigned the acquisition accounting premium (AAP) as follows: AAP Item Initial Fair Value Useful Life (years) PPE, net $220,000 10 Customer List 120,000 10...

P acquired 75% of the shares in S on 1 January 20X7 when S had retained...

P acquired 75% of the shares in S on 1 January 20X7 when S had retained earnings of £15,000. The market price of S’s shares at the date of acquisition was £1.60. P values non-controlling interest at fair value at the date of acquisition. Goodwill is not impaired. P S Property, plant and equipment 80,000 60,000 Shares in S 68,000 Total Non Current Assets 148,000 60,000 Current Assets 52,000 35,000 Total Assets 200,000 95,000 Share capital - £1 shares 100,000...

Question