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In: Accounting
Dipper Corporation is acquiring Bulbul Corporation by exchanging 220,000 shares of Dipper stock and $80,000 cash...
Dipper Corporation is acquiring Bulbul Corporation by exchanging 220,000 shares of Dipper stock and $80,000 cash for all of Bulbul’s assets (valued at $500,000), liabilities ($200,000), and accumulated earnings and profits ($120,000). Betty purchased 40% of Bulbul five years ago for $60,000, and Keith purchased the remaining 60% for $90,000. What is the amount of the gain or loss that Betty and Keith recognize (if any), assuming that the exchange qualifies as a § 368 reorganization? What is the basis in their new Dipper stock?
Solutions
ekkarill92 answered 1 year agoRelated Solutions
Dipper Corporation is acquiring Bulbul Corporation by exchanging 220,000 shares of Dipper stock and $80,000 cash...
Dipper Corporation is acquiring Bulbul Corporation by exchanging
220,000 shares of Dipper stock and $80,000 cash for all of Bulbul’s
assets (valued at $500,000), liabilities ($200,000), and
accumulated earnings and profits ($120,000). Betty purchased 40% of
Bulbul five years ago for $60,000, and Keith purchased the
remaining 60% for $90,000. What is the amount of the gain or loss
that Betty and Keith recognize (if any), assuming that the exchange
qualifies as a § 368 reorganization? What is the basis...
Shepherd Corporation is considering acquiring RentCo by exchanging its stock (value of $10 per share) for...
Shepherd Corporation is considering acquiring RentCo by
exchanging its stock (value of $10 per share) for RentCo's only
asset, a tract of land (adjusted basis of $150,000 and no
liability). The yearly net rent that RentCo receives on the land is
$50,000. Shepherd anticipates that it will receive the same net
rent for the land over the next 20 years. At the end of that time,
it would sell the land for $400,000. Assume that Shepard uses a 10%
discount...
On January 1, 2020, Fisher Corporation purchased 40 percent (80,000 shares) of the common stock of...
On January 1, 2020, Fisher Corporation purchased 40 percent
(80,000 shares) of the common stock of Bowden, Inc., for $978,000
in cash and began to use the equity method for the investment. The
price paid represented a $66,000 payment in excess of the book
value of Fisher's share of Bowden's underlying net assets. Fisher
was willing to make this extra payment because of a recently
developed patent held by Bowden with a 15-year remaining life. All
other assets were considered...
On January 1, 2017, Fisher Corporation purchased 40 percent (80,000 shares) of the common stock of...
On January 1, 2017, Fisher Corporation purchased 40 percent
(80,000 shares) of the common stock of Bowden, Inc. for $976,000 in
cash and began to use the equity method for the investment. The
price paid represented a $60,000 payment in excess of the book
value of Fisher's share of Bowden's underlying net assets. Fisher
was willing to make this extra payment because of a recently
developed patent held by Bowden with a 15-year remaining life. All
other assets were considered...
On January 1, 2017, Fisher Corporation purchased 40 percent (80,000 shares) of the common stock of...
On January 1, 2017, Fisher Corporation purchased 40 percent
(80,000 shares) of the common stock of Bowden, Inc. for $978,000 in
cash and began to use the equity method for the investment. The
price paid represented a $66,000 payment in excess of the book
value of Fisher's share of Bowden's underlying net assets. Fisher
was willing to make this extra payment because of a recently
developed patent held by Bowden with a 15-year remaining life. All
other assets were considered...
On January 1, 2017, Fisher Corporation purchased 40 percent (80,000 shares) of the common stock of...
On January 1, 2017, Fisher Corporation purchased 40 percent
(80,000 shares) of the common stock of Bowden, Inc. for $976,000 in
cash and began to use the equity method for the investment. The
price paid represented a $60,000 payment in excess of the book
value of Fisher's share of Bowden's underlying net assets. Fisher
was willing to make this extra payment because of a recently
developed patent held by Bowden with a 15-year remaining life. All
other assets were considered...
Exercise 1- 1 May Toshiba, Inc., issued shares of common stock for $80,000 cash deposited in...
Exercise
1- 1 May Toshiba, Inc., issued shares of common stock for $80,000
cash deposited in the new business account.
2- 7 May Toshiba purchased supplies on account from Office Nadia
for $2000 and paid $ 3000 cash for purchased a computer.
3- 10 May Toshiba Corporation sold goods of $ 30 000 for Tamer
company and collected $ 10 000 cash and the rest amount on
account.
4- 13 May Toshiba Corporation paid a total of $500 for salaries...
Nasser Corporation is authorized to issue 80,000 shares of $5 par value common stock. During 2008,...
Nasser Corporation is authorized to issue 80,000 shares of $5
par value common stock. During 2008, Lindsey Hunter took part in
the following selected transactions.
1. Issued 10,000 shares of stock at $50 per share, less costs
related to the issuance of
the stock totaling $10,000.
2. Issued 1,000 shares of stock for land appraised at $50,000. The
stock was actively traded on a national stock exchange at
approximately $48 per share on the date of issuance.
3. Purchased 500...
Hilton Corporation has 1 million shares of common stock outstanding and 80,000 bonds with 6% coupon...
Hilton Corporation has 1 million shares of common stock
outstanding and 80,000 bonds with 6% coupon at $1000 par each. The
stock currently sells at $53 per share and has a beta of 1.15; the
bonds have 25 years to maturity and sell at $1141. The market risk
premium is 6.8% and Treasury bills are yielding 3.1%. If Hilton’s
corporate tax rate is 21%, what is the company’s cost of capital
(WACC)?
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
building that is undervalued by $480,000, an unrecorded License
Agreement with a fair value of...
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