Question
In: Accounting
The Parent company acquires all issued capital of the subsidiary company for a consideration of $1000000...
The Parent company acquires all issued capital of the subsidiary company for a consideration of $1000000 cash and 800000 shares each valued at $1.25. The summary statement of financial position of the subsidiary company immediately following the acquisition is: Fair value of assets acquired $2640000 Fair value of liabilities acquired $720000 Total shareholders’ equity of the subsidiary company $800000 Retained earnings of the subsidiary company $1120000 Required: (i) Pass the necessary journal entry to record the acquisition (ii) Determine the amount of goodwill (or bargain purchase) arising out of the acquisition. (iii) Pass the necessary consolidation entry to eliminate the subsidiary by the parent company. (iii) Determine the amount of goodwill (or bargain purchase) arising out of the acquisition if the purchase consideration paid was $1000000 cash and 400000 shares each valued at $1.25.
Solutions
ekkarill92 answered 1 year agoRelated Solutions
The P Ltd acquires all issued capital of the S Ltd for a consideration of $1,000,000...
The P Ltd acquires all issued capital of the S Ltd for a
consideration of $1,000,000 cash and 800,000 shares each valued at
$1.50. The summary statement of the financial position of the
subsidiary company immediately following the acquisition is: Fair
value of assets acquired $2,640,000 Fair value of liabilities
acquired $720,000 Total shareholders’ equity of the subsidiary
company $800,000 Retained earnings of the subsidiary company
$1,120,000 Required:
(a) Pass the necessary journal entry to record the acquisition
(b) Determine...
The P Ltd acquires all issued capital of the S Ltd for a consideration of $1,000,000...
The P Ltd acquires all issued capital of the S Ltd for a
consideration of $1,000,000 cash and 800,000 shares each valued at
$1.50. The summary statement of the financial position of the
subsidiary company immediately following the acquisition is: Fair
value of assets acquired $2,640,000 Fair value of liabilities
acquired $720,000 Total shareholders’ equity of the subsidiary
company $800,000 Retained earnings of the subsidiary company
$1,120,000
Required: (a) Pass the necessary journal entry to record the
acquisition (b) Determine...
A Contingent Consideration Problem Parent Company acquires 100 % of Sub Company for by exchanging 100,000...
A Contingent Consideration Problem
Parent Company acquires 100 % of Sub Company for by exchanging
100,000 shares of its $1 par value common stock with a current
market value of $35 per share. The agreement contains a provision
that:
If the subsidiary earns a net income of more than $500,000
during the first year following the acquisition, an additional cash
payment for 30% of the excess over $500,000 will be paid at that
time, and
If the price per share...
Assume that a Parent company acquires an 80% interest in its Subsidiary on January 1, 2020....
Assume that a Parent company acquires an 80% interest in its
Subsidiary on January 1, 2020. On January 1, 2020, the book value
of net assets and the fair value of the identifiable net assets
equaled the book value of identifiable net assets (i.e. there was
no AAP or Goodwill). The parent uses the equity method to account
for its investment in the subsidiary.
On December 31, 2021, the Subsidiary company issued $1,000,000
(face) 6 percent, five-year bonds to an...
Assume that a Parent company acquires a 75% interest in its Subsidiary on January 1, 2016....
Assume that a Parent company acquires
a 75% interest in its Subsidiary on January 1, 2016. On the date of
acquisition, the fair value of the 75% controlling interest was
$1,800,000 and the fair value of the 25% noncontrolling interest
was $600,000. On January 1, 2016, the book value of net assets
equaled $2,400,000 and the fair value of the identifiable net
assets equaled the book value of identifiable net assets (i.e.
there was no AAP or Goodwill). The parent...
Assume that a Parent company acquires a 90% interest in its Subsidiary on January 1, 2016....
Assume that a Parent company acquires a 90% interest in its
Subsidiary on January 1, 2016. On the date of acquisition, the fair
value of the 90% controlling interest was $2,160,000 and the fair
value of the 10% noncontrolling interest was $240,000. On January
1, 2016, the book value of net assets equaled $2,400,000 and the
fair value of the identifiable net assets equaled the book value of
identifiable net assets (i.e. there was no AAP or Goodwill). The
subsidiary’s...
Assume that a Parent company acquires a 90% interest in its Subsidiary on January 1, 2016....
Assume that a Parent company acquires a 90% interest in its
Subsidiary on January 1, 2016. On the date of acquisition, the fair
value of the 90% controlling interest was $2,160,000 and the fair
value of the 10% noncontrolling interest was $240,000. On January
1, 2016, the book value of net assets equaled $2,400,000 and the
fair value of the identifiable net assets equaled the book value of
identifiable net assets (i.e. there was no AAP or Goodwill). The
subsidiary’s...
1.Parent Corp ltd acquires all of Subsidiary Corp ltd. outstanding common Stock for $ 300,000 in...
1.Parent Corp ltd acquires all of Subsidiary Corp ltd.
outstanding common Stock for $ 300,000 in 2016, equal with the fair
value of Subsidiary Corp ltd as a whole. Fair Value of Subsidiary
Corp ltd individual assets and liabilities are equal with its book
value. The balance sheets show that the total book value of the
share acquired equals the total stakeholder’s equity of Subsidiary
Corp ltd ($200,000+$100,000). Pass the necessary journal entries
and prepare the consolidated balance sheet after...
Assume that the parent company acquires its subsidiary by exchanging 75,400 shares of its Common Stock,...
Assume that the parent company acquires its subsidiary by
exchanging 75,400 shares of its Common Stock, with a fair value on
the acquisition date of $30 per share, for all of the outstanding
voting shares of the investee. In its analysis of the investee
company, the parent values all of the subsidiary’s assets and
liabilities at an amount equaling their book values except for a
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Agreement with a fair value of...
Assume that the parent company acquires its subsidiary by exchanging 84,000 shares of its $2 par...
Assume that the parent company acquires its subsidiary by
exchanging 84,000 shares of its $2 par value Common Stock, with a
fair value on the acquisition date of $38 per share, for all of the
outstanding voting shares of the investee. In its analysis of the
investee company, the parent values all of the subsidiary’s assets
and liabilities at an amount equaling their book values except for
an unrecorded Trademark with a fair value of $240,000, an
unrecorded Video Library...
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