Reference no: EM133128766
Question - On January 1, 2021, PABLO Co. acquired all of the identifiable assets and assumed all of the liabilities of ESCOBAR, Inc. by paying cash of 4,000,000. On this date, the identifiable assets acquired and liabilities assumed have fair values of 6,400,000 and 3,600,000, respectively. The terms of the business combination agreement are shown below:
A. Half of the 4,000,000 agreed consideration shall be paid on January 1,2021 and the other half on December 31, 2025. The prevailing market rate as of January 1, 2021 is 10%.
B. In addition, PABLO agrees to provide for the following:
a. A piece of land with a carrying amount of 2,000,000 and fair value of 1,200,000 shall be transferred to the former owners of ESCOBAR.
b. After the combination, ESCOBAR's activities shall be continued by PABLO. PABLO agrees to provide a patented technology for use in the activities of ESCOBAR. The patented technology has a carrying amount of 240,000 in the books of PABLO and a fair value of 320,000.
Included in the liabilities assumed is an estimated liability on a pending lawsuit filed against ESCOBAR by a third party with an acquisition-date fair value of 400,000. The carrying amount of the liability in ESCOBAR's books immediately before the business combination is 480,000. ESCOBAR guarantees to indemnify PABLO for any settlement amount of the liability in excess of 480,000.
Required - Determine the following:
a. Determine the fair value of the consideration given.
b. Determine the fair value of Net Assets acquired.
c. Determine the Goodwill (gain on bargain purchase).
|
Understanding of object oriented concepts
: Demonstrate a working knowledge of lists in Java and Design a good OO solution from a specification - Evaluate your understanding of object oriented concepts
|
|
Discuss the reporting requirements
: Discuss the reporting requirements in accordance with AASB108 'Accounting Policies, Changes in Accounting Estimates and Errors'. If necessary
|
|
How much will sales increase
: Sales is in Units of $1000.00 and Advertising is in Units of $100. If $100 is spent on advertising, how much will sales increase
|
|
How much is the goodwill
: The fair value of the identifiable net assets of XYZ Inc. on January 1, 2021 is 4,000,000. How much is the goodwill
|
|
Determine the fair value of net assets acquired
: Half of the 4,000,000 agreed consideration shall be paid on January 1,2021 and the other half on December 31, 2025. Determine fair value of Net Assets acquired
|
|
Prepare the necessary journal entries to record transactions
: John's purchased merchandise on account for $5,300. Freight charges of $450 were paid in cash. Prepare the necessary journal entries to record transactions
|
|
Write a memo to mr moe lawner
: Write a memo to Mr. Moe Lawner that explains and illustrates the steps in the recording process for each of the March 15 transactions
|
|
Determine the public health impact
: Planning and using epidemiology to determine the public health impact on the specified population and an assessment of needs
|
|
Prepare one summary journal entry at december
: Prepare one summary journal entry at December 31, 2021, to record the cost of replacing the defective game consoles returned during November and December
|