there are 11 total entries for this question Account Titles and ExplanationDebitCredit On July 1, 2025, Pronghorn Corporation purchased Young Company by paying $252,100 cash and issuing a $146,000 note payable toSteve Young. At July 1, 2025, the balance sheet of Young Company was as follows.CashAccounts receivableInventoryLandBuildings (net)Equipment (net)Trademarks$50,90091,600107,00041,60075,60069,90011,600$448,200Accounts payableStockholders' equity$205,000243,200$448,200The recorded amounts all approximate current values except for land (fair value of $60,100), inventory (fair value of $124,500), andtrademarks (fair value of $16,080).

Journal entry refers to recording and classyfing of business transaction into books of accounts…

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On January 1, 2021, ABC acquired all the assets and assumed all the liabilities of DEF Co. for P4,500,000. Relevant information follows: ASSETS Carrying Value 55,000 800,000 Fair Values 55,C00 Cash Receivable 800,C00 150,000 700,000 3,500,000 150,000 1,555,000 180,C00 750,C00 4,000,C00 200,C00 1,555,0000 Allowance for Doubtful Accounts Inventory Land Goodwill Liabilities DEC Co. has research and development projects with fair value of P100,000. ABC does not intend to use those R&Ds. However, there have been exchange transactions involving the information generated from DEF, but those transactions are infrequent > All fair value adjustments result to temporary differences but do not affect the tax bases of the assets and liabilities. The taxrate is 30%. > ABC incurred P200,000 on general administrative costs of maintaining an internal acquisition department. Compute the goodwill (gain on bargain purchase)?
On March 1, 2020, Dorsey Corporation purchased Johnson Company. The book and fair value of Johnson's balance sheet accounts is shown below. Record the purchase on Dorsey's books under each of the following independent assumptions. a. Dorsey paid Johnson $1,000,000 b. Dorsey paid Johnson $700,000 Book Value Fair Value Cash 50,000 50,000 Accounts Receivable 90,000 75,000 Inventory 125,000 175,000 Equipment 70,000 100,000 Buildings 75,000 95,000 Land 600,000 700,000 Accounts Payable 200,000 200,000 Note Payable Retained Earnings 100,000 100,000 315,000 315,000 Common Stock 15,000 250,000 Paid in Capital For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). 380,000 380,000
On January 1, 2021, P Corporation purchases from an unrelated person all the outstanding stock of S Corporation for $90,000. S’s balance sheet on the purchase date is as follows: Assets Basis Fair Market Value Cash $ 5,000 $ 5,000 Accounts Receivable 20,000 20,000 Inventory (LIFO) 20,000 40,000 Equipment (accumulated depreciation of $10,000) 30,000 45,000 Total Assets $75,000 $110,000 Liabilities Accounts payable $20,000 $ 20,000 Equity 55,000 90,000 Total liabilities and equity $75,000 $110,000 P properly elects § 338. S’s tax rate is 21 percent. a. What is the aggregate basis of S’s assets after this transaction? b. What is the basis for each individual asset?
On January 1, 2021, P Corporation purchases from an unrelated person all the outstanding stock of S Corporation for $90,000. S's balance sheet on the purchase date is as follows: Basis Fair Market Value Assets Cash $ 5,000 $ 5,000 Accounts Receivable 20,000 20,000 Inventory (LIFO) 20,000 40,000 Equipment (accumulated depreciation of $10,000) 30,000 45,000 Total Assets $75,000 $110,000 Liabilities Accounts payable $20,000 $ 20,000 Equity 55,000 90,000 Total liabilities and equity $75,000 $110,000 P properly elects § 338. S's tax rate is 21 percent. a. What is the aggregate basis of S's assets after this transaction? b. What is the basis for each individual asset?
On January 1, 2022, William Corp. (qualifies as SME) paid cash of P600,000 for all the outstanding shares of Kate Company. The carrying value of the assets and liabilities of Kate on January 1, 2022 follow: Accounts Receivable Inventory • Plant & Equipment (net of Accumulated Depreciation of P220,000) Goodwill Liabilities P90,000 180,000 320,000 100,000 120,000 On January 1, 2022 Kate inventory had a fair value of P150,000 and plant & equipment (net) had a fair value of P380,000. Cost of arranging the combination are as follows: legal fees for combination, P30,000; finder's fee, P50,000; other miscellaneous direct costs, P25,000. Net income of William and Kate for 2022 amounts to P188,000 and P60,000, respectively. William received dividend of P18,000 from Kate during 2022. The PPE has original useful life of 10 years and was already held for 4 years as of date of acquisition. Determine the amount of Goodwill on the Consolidated balance sheet on December 31, 2022.
Adams, Inc., acquires Clay Corporation on January 1, 2020, in exchange for $713,300 cash. Immediately after the acquisition, the two companies have the following account balances. Clay’s equipment (with a five-year remaining life) is actually worth $641,000. Credit balances are indicated by parentheses. Adams Clay Current assets $ 382,000 $ 272,000 Investment in Clay 713,300 0 Equipment 837,000 584,000 Liabilities (202,000 ) (224,000 ) Common stock (350,000 ) (150,000 ) Retained earnings, 1/1/20 (1,380,300 ) (482,000 ) In 2020, Clay earns a net income of $74,100 and declares and pays a $5,000 cash dividend. In 2020, Adams reports net income from its own operations (exclusive of any income from Clay) of $160,000 and declares no dividends. At the end of 2021, selected account balances for the two companies are as follows: Adams Clay Revenues $ (544,000 ) $ (286,000 ) Expenses 394,400 214,500 Investment…
Adams, Inc., acquires Clay Corporation on January 1, 2020, in exchange for $713,300 cash. Immediately after the acquisition, the two companies have the following account balances. Clay’s equipment (with a five-year remaining life) is actually worth $641,000. Credit balances are indicated by parentheses. Adams Clay Current assets $ 382,000 $ 272,000 Investment in Clay 713,300 0 Equipment 837,000 584,000 Liabilities (202,000 ) (224,000 ) Common stock (350,000 ) (150,000 ) Retained earnings, 1/1/20 (1,380,300 ) (482,000 ) In 2020, Clay earns a net income of $74,100 and declares and pays a $5,000 cash dividend. In 2020, Adams reports net income from its own operations (exclusive of any income from Clay) of $160,000 and declares no dividends. At the end of 2021, selected account balances for the two companies are as follows: Adams Clay Revenues $ (544,000 ) $ (286,000 ) Expenses 394,400 214,500 Investment…
Adams, Incorporated, acquires Clay Corporation on January 1, 2023, in exchange for $550,400 cash. Immediately after the acquisition, the two companies have the following account balances. Clay’s equipment (with a five-year remaining life) is actually worth $537,600. Credit balances are indicated by parentheses. Items Adams Clay Current assets $ 480,000 $ 236,000 Investment in Clay 550,400 0 Equipment 713,600 462,000 Liabilities (261,000) (232,000) Common stock (350,000) (150,000) Retained earnings, 1/1/23 (1,133,000) (316,000) In 2023, Clay earns a net income of $50,400 and declares and pays a $5,000 cash dividend. In 2023, Adams reports net income from its own operations (exclusive of any income from Clay) of $201,000 and declares no dividends. At the end of 2024, selected account balances for the two companies are as follows: Items Adams Clay Revenues $ (508,000) $ (360,000) Expenses 368,300 270,000 Investment income Not given 0 Retained earnings,…
Adams, Incorporated, acquires Clay Corporation on January 1, 2023, in exchange for $550,400 cash. Immediately after the acquisition, the two companies have the following account balances. Clay’s equipment (with a five-year remaining life) is actually worth $537,600. Credit balances are indicated by parentheses. Items Adams Clay Current assets $ 480,000 $ 236,000 Investment in Clay 550,400 0 Equipment 713,600 462,000 Liabilities (261,000) (232,000) Common stock (350,000) (150,000) Retained earnings, 1/1/23 (1,133,000) (316,000) In 2023, Clay earns a net income of $50,400 and declares and pays a $5,000 cash dividend. In 2023, Adams reports net income from its own operations (exclusive of any income from Clay) of $201,000 and declares no dividends. At the end of 2024, selected account balances for the two companies are as follows: Items Adams Clay Revenues $ (508,000) $ (360,000) Expenses 368,300 270,000 Investment income Not given 0 Retained earnings,…
Putin Company acquired the assets and assumed the liabilities of Joni Company on January 1, 2018, paying OMR 4,500,000 cash. Immediately prior to the acquisition, Joni Company's balance sheet was as follows:                                                 BOOK VALUE FAIR VALUE             Accounts receivable                        240,000              220,000             Inventory                                        290,000              320,000             Land                                                960,000           1,508,000             Buildings                                      1,020,000         1,392,000                   Total                                       2,510,000           3,440,000             Accounts payable                           270,000            270,000             Note payable                                   600,000              600,000             Common stock, $5 par                    420,000             Other contributed capital…
Adams, Inc., acquires Clay Corporation on January 1, 2020, in exchange for $732,300 cash. Immediately after the acquisition, the two companies have the following account balances. Clay’s equipment (with a five-year remaining life) is actually worth $604,900. Credit balances are indicated by parentheses. Adams Clay Current assets $ 326,000 $ 290,000 Investment in Clay 732,300 0 Equipment 781,900 526,000 Liabilities (280,000 ) (170,000 ) Common stock (350,000 ) (150,000 ) Retained earnings, 1/1/20 (1,210,200 ) (496,000 ) In 2020, Clay earns a net income of $62,700 and declares and pays a $5,000 cash dividend. In 2020, Adams reports net income from its own operations (exclusive of any income from Clay) of $193,000 and declares no dividends. At the end of 2021, selected account balances for the two companies are as follows:    Adams Clay Revenues $ (452,000 ) $ (272,000 ) Expenses 327,700 204,000 Investment…
Fowler Manufacturing Company purchased Blye Company on December 31, 2018. The balance sheet of Blye Company on the acquisition date was as follows: Blye Company Balance Sheet December 31, 2018 Assets                                                           Liabilities and Equities Cash                               $   210,000            Accounts payable                $   325,000 Receivables                         450,000            Inventory                             275,000            Common stock                         800,000 Plant assets (net)              1,025,000            Retained earnings       835,000 Total assets                    $1,960,000            Total liabilities and equities  $1,960,000 Appraisers estimated the fair market value of Blye’s inventory at $320,000 and the fair value of the plant assets at $1,425,000. The fair market value of the receivables and payables is equal to the amounts reported on the balance sheet. The agreed…

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