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CONCEPTS IN FED.TAX.,2020-W/ACCESS

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter9: Acquisitions Of Property

Section: Chapter Questions

Problem 44P

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Ram.5

Required Information
[The following information applies to the questions displayed below.]
Apple Corporation acquires 80 percent of Berry Corporation's common shares on January 1, 20X2. On
January 2, 20X2, Berry acquires 60 percent of Coco Corporation's common stock. Information on company
book values on the date of purchase and operating results for 20X2 is as follows:
Company
Apple Corporation
Berry Corporation
Coco Corporation
The fair values of the noncontrolling interests of Berry and Coco at the dates of acquisition were $60,000 and
$80,000, respectively.
Required:
Select the correct answer for each of the following questions.
Multiple Choice
$2,400.
Book Value
$ 800,000
300,000
200,000
5. Assume that Berry pays $150,000, rather than $120,000, to purchase 60 percent of Coco's common stock, and the fair
value of the noncontrolling interest is $100,000 at the date of acquisition. If the differential is amortized over 10 years, the
effect on 20x2 income assigned to the controlling shareholders will be a decrease of:
$3,000.
Purchase Price
$ 240,000
120,000
$5,000.
$0.
29X2 Operating Income
$ 100,000
80,000
50,000

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Required Information [The following information applies to the questions displayed below.] Apple Corporation acquires 80 percent of Berry Corporation's common shares on January 1, 20X2. On January 2, 20X2, Berry acquires 60 percent of Coco Corporation's common stock. Information on company book values on the date of purchase and operating results for 20X2 is as follows: Company Apple Corporation Berry Corporation Coco Corporation Required: Select the correct answer for each of the following questions. Multiple Choice The fair values of the noncontrolling interests of Berry and Coco at the dates of acquisition were $60,000 and $80,000, respectively. O $22,000. Book Value $ 800,000 300,000 200,000 O $46,000. Purchase Price $ 240,000 120,000 4. The amount of income assigned to the noncontrolling interest in the 20X2 consolidated income statement is: O $42.000. $20,000. 28X2 Operating Income $ 100,000 80,000 50,000
Paulos Company purchases a controlling interest in Sanjoy Company. Sanjoy had identifiable net assets with a book value of $500,000 and a fair value of $800,000. It was agreed that the total fair value of Sanjoy’s common stock was $1,200,000. Use value analysis schedules to determine what adjustments will be made to Sanjoy’s accounts andwhat new accounts and amounts will be recorded if: a. Paulos purchases 100% of Sanjoy’s common stock for $1,200,000. b. Paulos purchases 80% of Sanjoy’s common stock for $960,000.
2. Banana Company purchases 80 percent of Mango. At the date of acquisition, Mango has revenue of P250,000 and expenses of P170,000. What amount of pre-acquisition earnings will be created on the consolidated income statement at the acquisition date? 3. Delta Corporation acquires 70 percent of Bravo Company’s stock. What amount of non-controlling interest is recognized on the acquisition date balance sheet if Telephone has the following account balances? Book Value Market Value Cash P10,000 P10,000 Inventory 80,000 80,000 Plant Assets (net) 350,000 350,000 Cost of Goods Sold 130,000 Depreciation Expense 20,000 Liabilities (110,000) (110,000) Common Stock (30,000) Retained…
Panther Company is about to acquire a 100% interest in Snake Company. Snake has identifiable net assets with book and fair values of $300,000 and $500,000, respectively. As payment, Panther will issue common stock with a fair value of $750,000. How would the transaction be recorded if the acquisition is: a. An acquisition of net assets? b. An acquisition of Snake’s common stock and Snake remains a separate legal entity?
Company Aero is about to acquire 100% of company Berry. Company Berry has identifiable net assets with book value of $300,000 and $500,000 respectively. As payment Company Aero will issue common stock with a fair value of $75,000. How should the transaction be recorded if the acquisition is:a) An acquisition of net assets?b) An acquisition of Company B’s common stock and Company B remains a separate legal entity?
ABC Corporation acquired 70 percent of XYZ Corporation on August 1 for P420,000. On that date, XYZ Corporation had the following book values and market values. What is the amount of non-controlling interest on the acquisition date consolidated balance sheet? In good accounting form, please. Thank you! <33
ABC Company acquired XYZ Company in an acquisition. What date should be used as the acquisition date for the transaction? * The date ABC signs the contract to purchase the business. The date ABC obtains control of XYZ. The date that all contingencies related to the transaction are resolved. The date ABC purchased more than 20% of the stock of XYZ.
X Company purchased a (100%) controlling interest in Y Company by issuing $2,000,000 worth of common shares. The business combination agreement has an earnout clause that states the following: X Company would pay 10% of any earnings in excess of $750,000 to Y's shareholders in the first year following the acquisition. On acquisition date, X's shares had a market value of $80 per share.Required:a) Assuming that Y's net income in the first year following the acquisition was $950,000, prepare any journal entries (for X Company) that are necessary to reflect Y's results under IFRS 3 Business Combinations.b) Assuming that the agreement called for Y's shareholders to be compensated with 1,250 shares for any decline in X's share price, what journal entries would be required under IFRS 3, if the market value of X's shares dropped to $64 within the year?
On August 1, ABC Corporation acquired 80 percent of XYZ Corporation for P560,000. XYZ Corporation had the following book and market values at acquisition date. In good accounting form, please. Thank you! <33
Illustration 2. Non-Controlling InterestOn January 1, 2021, Inahan Co. acquired 75% of the voting shares of Bunso, Inc. As of this date, the carrying amounts and fair values of the assets and liabilities of Bunso acquired by Inahan are shown below: On the negotiation for the business combination, Inahan Co. incurred the following transaction costs: P65,000.00 for legal fees; P 125,000.00 for due diligence costs and P 60,000.00 for the general administrative costs of maintaining an internal acquisitions department. Case 1: Non-Controlling Interest measured at fair valueInahan Co. elects the option to measure the non-controlling interest at fair value. The independent consultant engaged by Inahan Co. determined that the fair value of the 25% non-controlling interest in Bunso, Inc. is P600,000.00. Inahan paid P 1,500,000.00 cash and P750,000.00 land with fair value of P 1,000,000.00 as consideration for the 75% interest in Bunso, Inc. 1.How much is the transaction costs incurred during…
Illustration 2. Non-Controlling InterestOn January 1, 2021, Inahan Co. acquired 75% of the voting shares of Bunso, Inc. As of this date, the carrying amounts and fair values of the assets and liabilities of Bunso acquired by Inahan are shown below: On the negotiation for the business combination, Inahan Co. incurred the following transaction costs: P65,000.00 for legal fees; P 125,000.00 for due diligence costs and P 60,000.00 for the general administrative costs of maintaining an internal acquisitions department. 1.How much is the previously held equity interest in the acquiree?a. 0.00b. 600,000.00c. 652,500.00d. 833,333.33 2.How much is the fair value of the net identifiable assets acquired?a. 4,560,000.00b. 2,610,000.00c. 3,110,000.00d. 2,810,000.00 3.How much is the goodwill (gain on bargain purchase) on the business combination?a. 490,000.00b. 542,500.00c. 723,333.33d. 750,000.00
PROTEIN Ent, purchases 90% of the outstanding voting shares of FIBER Corp on January 1, 2021. On that date, A. PROTEIN’s Non-controlling interest account will include 10% of the book value of FIBER’s net assets B. PROTEIN’s Non-controlling interest account will include 10% of the acquisition differential on the Date of Acquisition. C. PROTEIN’s Non-controlling interest account will include 10% of any unallocated portion of the acquisition differential on the Date of Acquisition. D. PROTEIN’s Non-controlling interest account will include 10% of the fair value of FIBER’s net asset.

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