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    Advance Financial Accounting (Assignment)

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    asegid
    Paw Man Corporation acquired Silbert Company for $850,000 cash on December 31, 2002. Silbert's stockholders' equity was $800,000 consisting of common stock of $100,000, additional paid-in capital of $300,000, and retained earnings of $400,000. The fair values of some of Silbert's assets differed from their carrying amounts. ADDIS Corporation acquired THOMAS company by paying $300,000 cash to stockholders and $50,000 for fees on May 31, 2003. THOMAS became a subsidiary. The separate balance sheets and fair values of THOMAS's assets are provided. Tana Corporation acquired 88% of

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    Advance Financial Accounting (Assignment)

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    asegid
    318 views3 pages
    Paw Man Corporation acquired Silbert Company for $850,000 cash on December 31, 2002. Silbert's stockholders' equity was $800,000 consisting of common stock of $100,000, additional paid-in capital of $300,000, and retained earnings of $400,000. The fair values of some of Silbert's assets differed from their carrying amounts. ADDIS Corporation acquired THOMAS company by paying $300,000 cash to stockholders and $50,000 for fees on May 31, 2003. THOMAS became a subsidiary. The separate balance sheets and fair values of THOMAS's assets are provided. Tana Corporation acquired 88% of

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    Advance Financial Accounting (assignment )

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    Paw Man Corporation acquired Silbert Company for $850,000 cash on December 31, 2002. Silbert's stockholders' equity was $800,000 consisting of common stock of $100,000, additional paid-in capital of $300,000, and retained earnings of $400,000. The fair values of some of Silbert's assets differed from their carrying amounts. ADDIS Corporation acquired THOMAS company by paying $300,000 cash to stockholders and $50,000 for fees on May 31, 2003. THOMAS became a subsidiary. The separate balance sheets and fair values of THOMAS's assets are provided. Tana Corporation acquired 88% of

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    318 views3 pages

    Advance Financial Accounting (Assignment)

    Uploaded by

    asegid
    Paw Man Corporation acquired Silbert Company for $850,000 cash on December 31, 2002. Silbert's stockholders' equity was $800,000 consisting of common stock of $100,000, additional paid-in capital of $300,000, and retained earnings of $400,000. The fair values of some of Silbert's assets differed from their carrying amounts. ADDIS Corporation acquired THOMAS company by paying $300,000 cash to stockholders and $50,000 for fees on May 31, 2003. THOMAS became a subsidiary. The separate balance sheets and fair values of THOMAS's assets are provided. Tana Corporation acquired 88% of

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    Assignment

    Q.1. On December 31, 2002, paw Man Corporation acquired all the outstanding common
    stock of Silbert Company for $ 850,000 cash, including direct-out-of pocket cost of the

    business combination. Stock holders’ equity of silbert totaled $ 800,000. Consisting of


    common stock, $ 100,000, additional-paid-in-capital $ 300,000 and retained earnings $400,000.
    The current fair value of Silbert’s identifiable net assets was the same as their carrying amounts
    except for the following:

    Current Carrying Fair Value amounts Differences


    Inventories $ 339,000 $ 320,000 $ 19,000
    Long-Term Inv’t in marketable
    Debt security held to maturity 61,000 50,000 11,000
    Plant assets (net) 1,026,000 984,000 42,000
    Intangible assets (net) 54,000 36,000 18,000
    Required
    A. Determine the amount of goodwill
    B. What is the consolidated balance of common stock, additional-paid-in-capital, retained
    earnings, inventories, plant assets and intangible assets?
    C. Record the journal entry

    Q.2. On May 31, 2003 ADDIS Corporation acquired all 10,000 shares of THOMAS
    company’s outstanding common stocks by paying birr 300,000 cash to THOMAS stockholders
    and birr 50,000 cash for Finders and legal fees relating to business combination. There was no
    contingent consideration and THOMAS becomes a subsidiary of ADDIS. The separate balance
    sheet of ADDIS corporation and its subsidiary on May 31,2003, together with current fair
    values of THOMASES identifiable net assets are as follows:
    ABC CORPORATION AND THOMAS COMPANY
    Separate Balance sheets (Prior to business combination)

    May 31, 2003


    ADDIS THOMAS company
    Corporation Carrying Current Amounts Fair value
    Cash Birr 550,000 Birr 10,000 Birr 10,000
    Trade account receivable 700,000 60,000 60,000
    Inventories 1,400,000 120,000 140,000
    Plant assets(net) 2,850,000 610,000 690,000
    Total Assets Birr 5,500,000 Birr 800,000
    Liabilities & SHE:
    Current Liability Birr 500,000 Birr 80,000 Birr 80,000
    Long term debt 1,000,000 400,000 440,000
    Common stock birr 10 par 1,500,000 100,000
    Additional-paid-in-capital 1,200,000 40,000
    Retained earnings 1,300,000 180,000
    Total liabilities & SHE Birr 5,500,000 Birr 800,000
    Instruction
    A. Prepare journal entries for ADDIS Corporation to record the business combination with
    THOMAS Company on May 31, 2003.
    B. Prepare a working paper for consolidated Balance sheet for ADDIS corporation and
    subsidiary on May 31, 2003 and the related working paper elimination ( In journal
    entryformat).

    Q.3.On February 28, 2003, Tana Corporation acquired 88% of the outstanding common
    stock of Awash Companyfor Birr 50,000 cash and 5,000 shares of Tana’s Birr 10 par
    common stock with a current fair value of Birr 20 a share. Out-of-pocket costs of purchase type
    business combination paid by Tana on February 28, 2003, were as follows:

    Finder’s and Legal Fees ……………………………………. Birr 15,000


    Costs associated with SEC registration ……………… 10,000
    Total out-of-pocket costs of Business combination…. Birr 25,000
    On February 28, 2003, Awashstockholders equity consisted of common stock, Birr 1 par Birr
    10,000, Additional paid in capital, Birr 30,000, and Retained earnings, Birr 60,000. Carrying
    amounts of the following three identifiable assets or liabilities of Awash were less than the
    current fair values on February 28,2003 by the amounts indicated:

    Inventories ……………………………………… Birr 20,000


    Plant assets (net) ……………………………… 80,000
    Bonds payable ………………………………….. 30,000
    Required
    a. Prepare journal entries for TANA Corporation on February 28, 2003 to record the
    business combination with Awash Company.
    b. Prepare working paper to complete the following amounts for the consolidated balance
    sheet of TANACorporation and subsidiary on February 28, 2003.
    1. Good will
    2. Minority interest in net assets of subsidiary

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