Reference no: EM132769068
Questions -
Q1. Carreh acquires assets and liabilities of Sam Company on January 1,2016. To obtain these shares, Carreh pays $400,000 and issues 10,000 shares of $20 par value common stock on this date. Carreh 's stock had a fair value of $36 per share on that date. Carreh also pays $15,000 to a local investment firm for arranging the transaction. An additional $10,000 was paid by Carreh in stock issuance costs. The book values for both Carreh and Sam as of January 1,2016 follow. The fair value of each of Carreh and Sam accounts is also included. In addition, Sam holds a fully amortized trademark that still retains $40,000 value. The figures below are in thousands. Any related questions also in thousands.
Sam Company Carreh, Inc. Book Value Fair Value
Cash $900 $80 $80 Receivables 480 180 160
Inventory 660 260 300 Land 300 120 130
Buildings(net) 1,200 220 280
Equipment(net) 360 100 75
Accounts Payable 480 60 60
Long-term liabilities 1,140 340 300
Common Stock 1,200 80
Retained earnings 1,080 480
Assuming the combination is accounted for as an acquisition, immediately after the acquisition, in the balance sheet of Carreh: What amount will be reported for goodwill?
2. The CCC Company acquired the net assets of the VVV Company on January 1, 2015, and made the following entry to record the purchase:
Current Assets 100,000
Equipment 150,000
Land 50,000
Buildings 300,000
Goodwill 100,000
Liabilities 80,000
Common stock,$1 par 100.000
Paid in capital in excess at par 520,000
Assuming that additional shares on January 1, 2017 would be issued on that date to compensate for any fall in the value at CCC common stock below $16 per share. The settlement would be to cure the deficiency by issuing added shares based on their fair value on January 1,2017. The fair price of the shares on January 1, 2017 was $10. What is the additional number of shares issued on January 1, 2017 to compensate for any fall in the value at the stock?
Q3. On September 1, 2014, Rich Company established two branches: Mall and Pall branches. The home office transferred $80,000 worth of cash and $350,000 worth of inventory to its Mall branch and instructed Naga to transfer 3/4 of the goods and cash received to Pall. In addition, on November 1, 2014, shipments from home office were received by Mall amounting to $125,000 and the branch paid freight costs amounting to $6,500. 3/5 of the said shipments were sold to outsiders. On December 1, 2014, Mall transferred half of the remaining November shipments from the home office to Pall, with Pall branch paying freight costs of $2,500. Had the merchandise been shipped from the home office to Pall branch, only $1,900 worth of freight would have been incurred. How much is the balance of the Pall branch account in the home office books?
Q4. Mita Company acquired 100 percent of the voting common shares of Standard Video Corporation, its bitter rival, by issuing bonds with a par value and fair value of 150,000. Immediately prior to the acquisition. Mita reported total assets of 500,000, liabilities of 280,000, and stockholders' equity at 220,000. At that date, Standard Video reported total assets at 400,000, liabilities of 250,000., and stockholders' equity of 150,000. Included in Standard's liabilities was an account payable to Mita in the amount at 20,000 which Mita included in its accounts receivable. Based on the preceding information: (1) what amount of total assets did Mita report in its balance sheet immediately after the acquisition: (2) what amount of assets was reported in the consolidated balance sheet immediately after the acquisition?
Q5. On January 1, 2016, Parent Company purchased 80% of the common stock of Subsidiary Company for 316, 000. On this date, Subsidiary Company had a common stock, other paid-in capital, and retained earnings of 40, 000, 120, 000, 190, 000, respectively. Parent Company's common stock amounted to P500, 000 and retained earnings of P200, 000. On January 1, 2016, the only tangible assets of Subsidiary that were undervalued were inventory and building. Inventory, for which FIFO is used, was worth 5, 000 more than cost. The inventory was sold in 2016. Building which was worth 15, 000 more than book value, has a remaining life of 8 years and straight-line depreciation is used. Any remaining excess is full-goodwill with impairment for 2016 amounting to 3, 000. Subsidiary Company reported net income of 50, 000 and paid dividends of 10, 000 in 2016 while the parent's reported net income amounted to 100, 000 and paid dividends of 20, 000. Determine the Consolidated Net Income Attributable to Controlling Interest/ Profit Attributable to Equity Holders of Parent.
Q6. Seminarian. Inc. has 100,000 shares of P2 par value stock outstanding. Priests Corporation acquired 30,000 shares of Seminarian's shares on January 1, 20x4 for l20000 when Seminarian's net assets had a total fair value of 350000. On July 1, 20x7, Priests agreed to buy an additional 60,000 shares of Seminarian from single stockholder for P6 per share" Although Seminarian's share 5. were selling in the $5 range around July 1, 20x7. Priests forecasted that obtaining control of Seminarian would produce significant revenue synergies to justify the premium price paid. if Seminarian's net identifiable assets had a fair value of 500000 on July i, 20x7, how much goodwill on full fair value basis should Priests report in its, post-combination consolidated balance sheet?
Q7. The CCC Company acquired the net assets of the VVV Company on January 1, 2015, and made the following entry to record the purchase:
Current Assets100,000
Equipment 150,000
Land 50,000
Buildings 300,000
Goodwill 100,000
Liabilities 80,000
Common stock,$1 par 100.000
Paid in capital in excess at par 520,000
Assuming that additional shares on January 1, 2017 would be issued on that date to compensate for any fall in the value at CCC common stock below $16 per share. The settlement would be to cure the deficiency by issuing added shares based on their fair value on January 1,2017. The fair price of the shares on January 1, 2017 was $10. What is the additional number of shares issued on January 1, 2017 to compensate for any fall in the value at the stock?
Q8. On September 1, 2014, Rich Company established two branches: Mall and Pall branches. The home office transferred $80,000 worth of cash and $350,000 worth of inventory to its Mall branch and instructed Naga to transfer 3/4 of the goods and cash received to Pall. In addition, on November 1, 2014, shipments from home office were received by Mall amounting to $125,000 and the branch paid freight costs amounting to $6,500. 3/5 of the said shipments were sold to outsiders. On December 1, 2014, Mall transferred half of the remaining November shipments from the home office to Pall, with Pall branch paying freight costs of $2,500. Had the merchandise been shipped from the home office to Pall branch, only $1,900 worth of freight would have been incurred. How much is the balance of the Pall branch account in the home office books?
Q9. Mita Company acquired 100 percent of the voting common shares of Standard Video Corporation, its bitter rival, by issuing bonds with a par value and fair value of 150,000. Immediately prior to the acquisition. Mita reported total assets of 500,000, liabilities of 280,000, and stockholders' equity at 220,000. At that date, Standard Video reported total assets at 400,000, liabilities of 250,000., and stockholders' equity of 150,000. Included in Standard's liabilities was an account payable to Mita in the amount at 20,000 which Mita included in its accounts receivable. Based on the preceding information: (1) what amount of total assets did Mita report in its balance sheet immediately after the acquisition: (2) what amount of assets was reported in the consolidated balance sheet immediately after the acquisition?
Q10. On January 1, 2016, Parent Company purchased 80% of the common stock of Subsidiary Company for 316, 000. On this date, Subsidiary Company had a common stock, other paid-in capital, and retained earnings of 40, 000, 120, 000, 190, 000, respectively. Parent Company's common stock amounted to P500, 000 and retained earnings of P200, 000. On January 1, 2016, the only tangible assets of Subsidiary that were undervalued were inventory and building. Inventory, for which FIFO is used, was worth 5, 000 more than cost. The inventory was sold in 2016. Building which was worth 15, 000 more than book value, has a remaining life of 8 years and straight-line depreciation is used. Any remaining excess is full-goodwill with impairment for 2016 amounting to 3, 000. Subsidiary Company reported net income of 50, 000 and paid dividends of 10, 000 in 2016 while the parent's reported net income amounted to 100, 000 and paid dividends of 20, 000. Determine the Consolidated Net Income Attributable to Controlling Interest/ Profit Attributable to Equity Holders of Parent.