Question

In: Accounting

1. Trident Corporation acquires Uvell Company’s assets and liabilities for $40,000,000 in cash. At the date...

1. Trident Corporation acquires Uvell Company’s assets and liabilities for $40,000,000 in cash. At the date of acquisition, Uvell’s balance sheet reported assets of $90,000,000 and liabilities of $82,000,000. Investigation reveals that Uvell’s buildings are overvalued by $6,000,000 and it has unreported liabilities valued at $5,000,000.

What journal entry will Trident Corp record as a result of this acquisition?

2. An acquiring company pays $45 million in cash, and issues new no-par stock with a fair value of $75 million, to the acquired company’s former owners, for the assets and liabilities of the acquired company. Registration fees associated with the new stock issuance are $300,000, paid in cash. Consulting fees for the acquisition are $1 million, paid in cash. The fair value of the acquired company’s identifiable net assets is $65 million.

What entry does the acquiring company make to record the acquisition?

3. A company invests $300,000 in equity securities on November 30, 2019, and classifies them as investments with no significant influence. At December 31, 2019, the company’s year-end, the securities have a fair value of $310,000. On February 1, 2020, the company sells the securities for $295,000.

What is reported on the Balance Sheet and Income Statement regarding the securities for 2019 and 2020?

4. Precision Company acquires all of Springfield Company’s voting stock for $5,000,000 in cash. Information on Springfield's assets and liabilities at the date of acquisition is as follows:

Book Values

Current assets $ 500,000

Land, buildings and equipment (net) $2,000,000

Liabilities ($600,000)

Capital stock ($500,000)

Retained earnings ($1,400,000)

Fair Values

Current assets $700,000

Land, buildings and equipment (net) $3,500,000

Liabilities ($550,000)

Capital stock

Retained earnings

In addition, Springfield Company has unrecorded identifiable intangible assets, in the form of brand names and lease agreements, with a total estimated fair value of $400,000.

Prepare the eliminating entries

Solutions

Expert Solution

1. Assets A/c. Dr. 84,000,000 ( Fair Value = 90,000,000-6,000,000)

Goodwill A/c Dr. 43,000,000 (Balancing Figure)

To Liabilities A/c. 82,000,000

To Unreported Liabilities A/c 5,000,000

To cash A/c 40,000,000

2. Net Assets A/c. Dr. 65,000,000

Goodwill A/c Dr. 56,300,000 ( Balancing Figure)

To Cash A/c. 46,300,000 (45,000,000+300,000+1,000,000)

To Common stock A/c. 75,000,000

3. Balance sheet as on 2019

CurrentAssets - Investments in Equity securities = 310000

Income statement for the year ended 2019

Unrealised gains on investments in equity securites = 10000

Balance sheet as on 2020

Current assets - Cash = 295000

Income statement for the year ended 2020

Realised loss on sale of investmens in equity securities = 15000

4. Land,Building & Equipments. Dr. 3,500,000

Current Assets Dr. 700,000

Identifiable Intangibles Dr. 400,000

Goowill Dr. 2,850,000

To liabilities 550,000

To Capital stock 500,000

To reatined earnings 1,400,000

To cash 5,000,000

ekkarill92 answered 7 months ago

Next > < Previous

Related Solutions

Allerton Company acquires all of Deluxe Company’s assets and liabilities for cash on January 1, 2015,...

Allerton Company acquires all of Deluxe Company’s assets and liabilities for cash on January 1, 2015, 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 $ 41,500 $ 41,500 Building 108,000 67,000 Land 17,000 35,200 Trademark 0 31,800 Goodwill 19,000 ? Liabilities (50,500) (50,500) Common stock (100,000) Retained earnings (35,000) Prepare Allerton’s entry to record its acquisition of Deluxe...

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...

Allerton Company acquires all of Deluxe Company’s assets andliabilities 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:BookValuesFairValuesCurrent assets$60,000$60,000Building90,00050,000Land10,00020,000Trademark030,000Goodwill15,000?Liabilities(40,000)(40,000)Common stock(100,000)Retained earnings(35,000)1&2. Prepare Allerton’s entry to record its acquisition of Deluxe in its accounting records assuming the following cash exchange amounts: $145,000 and $110,000. (If no entry is required for a transaction/event, select "No journal entry required" in the first account...

Plaza Corporation acquires all of the assets and liabilities of Spiceland Company. How are Spiceland’s research...

Plaza Corporation acquires all of the assets and liabilities of Spiceland Company. How are Spiceland’s research and development costs of ongoing projects reported on Plaza’s books at the date of acquisition? a. Included as part of goodwill b. Identifiable asset, at fair value c. Operating expense, at fair value d. Loss on acquisition, at Spiceland’s cost

Sully Company’s January 1, 2020 balance sheet is as follows: Assets Liabilities & Equity Cash, receivables...

Sully Company’s January 1, 2020 balance sheet is as follows: Assets Liabilities & Equity Cash, receivables $ 3,000,000 Current liabilities $ 2,000,000 Inventories 4,000,000 Long-term liabilities 6,500,000 Equity method investments 1,000,000 Capital stock 2,000,000 Land, buildings & equipment 5,500,000 Retained earnings 3,500,000 Accumulated other comprehensive loss (400,000) _________ Treasury stock (100,000) Total assets $13,500,000 Total liabilities & equity $13,500,000 On January 1, 2020, Pronto Corporation acquired Sully’s assets and liabilities for $50 million in cash. Sully’s cash and receivables, and...

On January 1, 2011, Petron Corporation acquires the net assets of the Shell Corporation for P625,000...

On January 1, 2011, Petron Corporation acquires the net assets of the Shell Corporation for P625,000 cash. Prior to the business combination, Shell Corporation has the following statement of financial position: Shell Corporation Statement of Financial Position January 1, 2011 Assets Liabilities and Equity Current assets: Current Liabilities P 62,500 Accounts Receivable P150,000 Shareholders’ equity: Inventories 125,000 P275,000 Ordinary Share Property, Plant, and Capital, P10 par P250,000 Equipment 350,000 Accumulated Profits 312,500 562,500 Total...

Given the financial statements for Jones Corporation and Smith Corporation: JONES CORPORATION Current Assets Liabilities Cash...

Given the financial statements for Jones Corporation and Smith Corporation: JONES CORPORATION Current Assets Liabilities Cash $ 121,300 Accounts payable $ 122,000 Accounts receivable 81,800 Bonds payable (long term) 82,400 Inventory 54,500 Long-Term Assets Stockholders' Equity Gross fixed assets $ 519,000 Common stock $ 150,000 Less: Accumulated depreciation 151,200 Paid-in capital 70,000 Net fixed assets* 367,800 Retained earnings 201,000 Total assets $ 625,400 Total liabilities and equity $ 625,400 Sales (on credit) $ 1,252,000 Cost of goods sold 758,000...

Given the financial statements for Jones Corporation and Smith Corporation: JONES CORPORATION Current Assets Liabilities Cash...

Given the financial statements for Jones Corporation and Smith Corporation: JONES CORPORATION Current Assets Liabilities Cash $ 21,400 Accounts payable $ 121,000 Accounts receivable 86,100 Bonds payable (long term) 89,700 Inventory 55,100 Long-Term Assets Stockholders' Equity Gross fixed assets $ 526,000 Common stock $ 150,000 Less: Accumulated depreciation 151,300 Paid-in capital 70,000 Net fixed assets* 374,700 Retained earnings 106,600 Total assets $ 537,300 Total liabilities and equity $ 537,300 Sales (on credit) $ 1,803,000 Cost of goods sold 760,000...

Given the financial statements for Jones Corporation and Smith Corporation: JONES CORPORATION Current Assets Liabilities Cash...

Given the financial statements for Jones Corporation and Smith Corporation: JONES CORPORATION Current Assets Liabilities Cash $ 21,100 Accounts payable $ 131,000 Accounts receivable 81,600 Bonds payable (long term) 82,800 Inventory 58,700 Long-Term Assets Stockholders' Equity Gross fixed assets $ 571,000 Common stock $ 150,000 Less: Accumulated depreciation 155,200 Paid-in capital 70,000 Net fixed assets* 415,800 Retained earnings 143,400 Total assets $ 577,200 Total liabilities and equity $ 577,200 Sales (on credit) $ 1,892,000 Cost of goods sold 771,000 Gross...

Merger and Stock Investment Saxton Corporation purchases all of Taylor Company’s assets and liabilities on January...

Merger and Stock Investment Saxton Corporation purchases all of Taylor Company’s assets and liabilities on January 1, 2016, for $15 million in cash. At the date of acquisition, Taylor’s reported assets consist of current assets of $10 million and plant and equipment of $70 million. It reports current liabilities of $16 million and long-term debt of $58 million. Investigation reveals that Taylor’s plant and equipment is overvalued by $2 million and it has an unreported customer database valued at $700,000....

Subjects