1.

MIR Company had the following accounts at the time it was acquired by Darby Co:

Cash          45,000.00

Accounts Receivable        682,500.00
Inventories        157,500.00
Fixed Assets    1,185,000.00
Accounts Payable        645,000.00

Darby paid 1,378,400.00 for net assets of MIR Company. It was determined that the fair market
values of the inventories was 125,500.00 and fixed asset at 1,124,400.00. A reorganization cost in
the amount of 49,000.00 are expected to be incurred as the result of business combination. What is
the amount of goodwill or gain that will be recorded in the books of Darby Company?

2Problem Solving

Time left 00:51:56

Question 2
Not yet answered
Marked out of 1.00

Serbia Co. was merged into Montenegro in a combination properly accounted for as acquisition
of net assets. The condensed balance sheets before the combination show:

 Montenegro  Serbia
Current Assets         5,525,000.00    2,475,000.00
Property Plant & Equipment         5,790,000.00    1,830,000.00
Other Non-current Assets          720,000.00
Total Assets      11,315,000.00    5,025,000.00
Liabilities         2,750,000.00        575,000.00
Capital Stock, par P200         5,400,000.00    2,800,000.00
Additional paid-in Capital            940,000.00        525,000.00
Retained Earnings         2,225,000.00    1,125,000.00
Total Liab & Equity      11,315,000.00    5,025,000.00
Serbia Co. assets have fair values of 2,118,000.00 for current assets, 1,429,000.00 for property
plant and equipment and 525,000.00 for non-current assets. Montenegro paid the net assets of
Serbia for 3,948,000.00. What is the amount of goodwill or gain in the acquisition? 

Problem Solving

Time left 00:51:24

Question 3
Not yet answered
Marked out of 1.00

Serbia Co. was merged into Montenegro in a combination properly accounted for as acquisition
of net assets. The condensed balance sheets before the combination show:

 Montenegro  Serbia
Current Assets         5,525,000.00    2,475,000.00
Property Plant & Equipment         5,790,000.00    1,830,000.00
Other Non-current Assets          720,000.00
Total Assets      11,315,000.00    5,025,000.00
Liabilities         2,750,000.00        575,000.00
Capital Stock, par P200         5,400,000.00    2,800,000.00
Additional paid-in Capital            940,000.00        525,000.00
Retained Earnings         2,225,000.00    1,125,000.00
Total Liab & Equity      11,315,000.00    5,025,000.00

Serbia Co. assets have fair values of 2,118,000.00 for current assets, 1,429,000.00 for property
plant and equipment and 525,000.00 for non-current assets. Montenegro paid the net assets of
Serbia for 3,948,000.00. What is the total net assets of the surviving company after the
combination?

Problem Solving

Time left 00:51:03
Question 4
Not yet answered
Marked out of 1.00

Electric Inc. issues P10 par common stock for the net assets of Water Inc. Electrc’s common
stocks at P20 per share. Waters statement of financial condition shows the following accounts:

Current assets ----------------------------------------------------------------    640,000.00

Fixed Assets -------------------------------------------------------------------      1,720,000.00

Liabilities -----------------------------------------------------------------------   680,000.00

Common Stock ---------------------------------------------------------------       1,000,000.00

Additional Paid In Capital -------------------------------------------------           1,240,000.00

Retained Earnings -----------------------------------------------------------        (520,000.00)

The fair market values of Water’s assets are 560,000.00  for current assets and 1,580,000.00 for
fixed assets. Electric Inc. issued shares of its common stock in payment for net assets of Water
Inc. Electric Inc. recognized gain on acquisition in the amount of 280,000.00. How many shares
were issued?

Problem Solving

Time left 00:50:42

Question 5
Not yet answered
Marked out of 1.00

Smith Company acquired the net assets of Tenth Inc. on July 1, 2013 and made the following
entry to record the acquisition:

Cash    280,000.00
Factory Equipment    420,000.00
Land & Building    140,000.00
Goodwill    840,000.00
Liabilities        224,000.00
Common stock, P1 par        280,000.00
Additional paid in capital    1,456,000.00

The acquirer and acquirer have contingency agreements that added shares would be issued on
December 31. 2013, to compensate for the fall in the value of Smith commons stock below P15
per share. The settlement would be to cure the deficiency by issuing added shares based fair
value on December 31, 2013. The market price of the shares on the said date was P12.

a.    How many additional shares shall be issued in lieu of the decrease in the value resulting to
cover the deficiency?

Problem Solving

Time left 00:50:04

Question 6
Not yet answered
Marked out of 1.00

Smith Company acquired the net assets of Tenth Inc. on July 1, 2013 and made the following
entry to record the acquisition:

Cash    280,000.00
Factory Equipment    420,000.00
Land & Building    140,000.00
Goodwill    840,000.00
Liabilities        224,000.00
Common stock, P1 par        280,000.00
 Additional paid in capital    1,456,000.00

The acquirer and acquirer have contingency agreements that added shares would be issued on
December 31. 2013, to compensate for the fall in the value of Smith commons stock below P15
per share. The settlement would be to cure the deficiency by issuing added shares based fair
value on December 31, 2013. The market price of the shares on the said date was P12.

How much is the decrease in the common stock?

Problem Solving

Time left 00:49:47

Question 7
Not yet answered
Marked out of 1.00

Smith Company acquired the net assets of Tenth Inc. on July 1, 2013 and made the following
entry to record the acquisition:

Cash    280,000.00
Factory Equipment    420,000.00
Land & Building    140,000.00
Goodwill    840,000.00
Liabilities        224,000.00
Common stock, P1 par        280,000.00
Additional paid in capital    1,456,000.00

The acquirer and acquirer have contingency agreements that added shares would be issued on
December 31. 2013, to compensate for the fall in the value of Smith commons stock below P15
per share. The settlement would be to cure the deficiency by issuing added shares based fair
value on December 31, 2013. The market price of the shares on the said date was P12.

 How much is the decrease in the additional paid in capital due to the change in market
valuation?