Question
1. Trident Corporation acquires Uvell Company's assets and liabilities for $40,000,000 in cash. At the date of acquisition, Uvell's balance sheet reported assets of $90,000,000
1. Trident Corporation acquires Uvell Company's assets and liabilities for $40,000,000 in cash. At the date of acquisition, Uvell's balance sheet reported assets of $90,000,000 and liabilities of $82,000,000. Investigation reveals that Uvell's buildings are overvalued by $6,000,000 and it has unreported liabilities valued at $5,000,000.
What journal entry will Trident Corp record as a result of this acquisition?
2. An acquiring company pays $45 million in cash, and issues new no-par stock with a fair value of $75 million, to the acquired company's former owners, for the assets and liabilities of the acquired company. Registration fees associated with the new stock issuance are $300,000, paid in cash. Consulting fees for the acquisition are $1 million, paid in cash. The fair value of the acquired company's identifiable net assets is $65 million.
What entry does the acquiring company make to record the acquisition?
3. A company invests $300,000 in equity securities on November 30, 2019, and classifies them as investments with no significant influence. At December 31, 2019, the company's year-end, the securities have a fair value of $310,000. On February 1, 2020, the company sells the securities for $295,000.
What is reported on the Balance Sheet and Income Statement regarding the securities for 2019 and 2020?
4. Precision Company acquires all of Springfield Company's voting stock for $5,000,000 in cash. Information on Springfield's assets and liabilities at the date of acquisition is as follows:
Book Values
Current assets $ 500,000
Land, buildings and equipment (net) $2,000,000
Liabilities ($600,000)
Capital stock ($500,000)
Retained earnings ($1,400,000)
Fair Values
Current assets $700,000
Land, buildings and equipment (net) $3,500,000
Liabilities ($550,000)
Capital stock
Retained earnings
In addition, Springfield Company has unrecorded identifiable intangible assets, in the form of brand names and lease agreements, with a total estimated fair value of $400,000.
Prepare the eliminating entries
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started