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Problem Solving: Time Left 00:51:56
Problem Solving: Time Left 00:51:56
MIR Company had the following accounts at the time it was acquired by Darby Co:
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?
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Question 2
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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?
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Question 3
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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?
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Question 4
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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:
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?
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Question 5
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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?
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Question 6
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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.
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Question 7
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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?