Question

In: Accounting

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 Assets

P625,000

Total Liabilities and

Equity

P625,000

The carrying values of Shell’s identifiable net assets approximated their fair value, except for inventories and property, plant, and equipment, which have fair market values of P175,000 and P375,000 respectively. To effect the business combination, Petron paid its legal advisers P6,250 representing their professional fees.

Required:

  1. Prepare journal entries to record the acquisition on the Petron Corporation’s books. Provide computations to support your entry.
  2. Prepare journal entries to record the sale on the books of Shell Corporation and the subsequent total liquidation of the corporation.

Solutions

Expert Solution

Please find the hand written notes for detailed journal entries:

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

16. On January 1, 2017, Charo Corporation acquires all of the net assets of Ricky Corporation...
16. On January 1, 2017, Charo Corporation acquires all of the net assets of Ricky Corporation for $1,500,000. The following intangible assets are included in the purchase agreement: Assets Acquisition Cost Goodwill and going concern value $175,000 Licenses $ 50,000 Patents $ 75,000 Covenant not to compete for five years $150,000 What is the total amount of amortization allowed in 2017? A) $20,000 B) $15,000 C) $30,000 D) $38,000
On January 1, 2016, Asure Corporation acquires the net assets of BlueBox Inc. and records the...
On January 1, 2016, Asure Corporation acquires the net assets of BlueBox Inc. and records the acquisition as a merger. Asure/s acquisition entry looks like this (amounts in thousands): General Journal Description Debit Credit Current assets 12,000 Plant and equipment 40,000 Identifiable intangibles 80,000 Goodwill 700,000 Notes payable 100,000 Cash 700,000 Earnings contingency liability 32,000 Brand names and customer lists comprise the identifiable intangibles. Required For each of the following independent situations, prepare Asure's journal entry, if any, to record...
1. On January 1, 20X8, Alaska Corporation acquired Mercantile Corporation's net assets by paying 1000 shares...
1. On January 1, 20X8, Alaska Corporation acquired Mercantile Corporation's net assets by paying 1000 shares stock, with market value of each share at $160 and par value at $1. Balance sheet data for the two companies and fair value information for Mercantile Corporation immediately before the business combination are given below: Alaska Mercantile Book Value Book Value Fair Value Cash                  200,000           30,000         30,000 Account Receivable                    40,000           22,000         22,000 Inventory                  120,000           25,000         36,000 Patents                    50,000           20,000         40,000 Buildings and equipment...
On January 1, 20X1, Porta Corporation purchased Swick Company’s net assets and assigned goodwill of $80,900...
On January 1, 20X1, Porta Corporation purchased Swick Company’s net assets and assigned goodwill of $80,900 to Reporting Division K. The following assets and liabilities are assigned to Reporting Division K on the acquisition date: Carrying Amount Fair Value Cash $ 14,900 $ 14,900 Inventory 56,900 71,900 Equipment 179,000 199,000 Goodwill 80,900 Accounts Payable 30,900 30,900 Required: On December 31, 20X3, Porta must test goodwill for impairment. Determine the amount of goodwill to be reported for Division K and the...
On January 1, 20X1, Porta Corporation purchased Swick Company’s net assets and assigned goodwill of $80,900...
On January 1, 20X1, Porta Corporation purchased Swick Company’s net assets and assigned goodwill of $80,900 to Reporting Division K. The following assets and liabilities are assigned to Reporting Division K on the acquisition date: Carrying Amount Fair Value Cash $ 14,900 $ 14,900 Inventory 56,900 71,900 Equipment 179,000 199,000 Goodwill 80,900 Accounts Payable 30,900 30,900 Required: On December 31, 20X3, Porta must test goodwill for impairment. Determine the amount of goodwill to be reported for Division K and the...
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,...
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...
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...
Konica Company acquires 40% of the voting stock of Lexmark Corporation on January 1, 2017, for...
Konica Company acquires 40% of the voting stock of Lexmark Corporation on January 1, 2017, for $60,000,000, and treats it as an equity method investment. There were no basis differences. Lexmark reports total net income of $20,000,000 for the period 2017 - 2020, and $5,000,000 for 2021. Lexmark paid no dividends during the period 2017 – 2020 but paid $1,000,000 in dividends in 2021. The accounting year for both companies ends December 31. Lexmark sells merchandise to Konica at a...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT