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** avoid plagiarism, No need copy answer from net, unique answer. Baskin Corporation pays $ 420,000 for Camlin Inc. and that the estimated FMV of

** avoid plagiarism, No need copy answer from net, unique answer.

  1. Baskin Corporation pays $ 420,000 for Camlin Inc. and that the estimated FMV of Assets, Liabilities and Equity are as follows: (1 Mark)

Account Receivable 100,000

Inventory 50,000

PP & E 200,000

Total Assets 350,000

Liabilities 70,000

Retained Earnings 80,000

Common Stock 200,000

Liabilities & Equities 350,000

Determine the amount of Goodwill.

2. Zaid Ltd and Zafar Ltd agreed to merge on January 1, 2019. On the date of the merger agreement, the companies reported the following data: (2 Marks)

Balance Sheet

Zaid Ltd

Zafar Ltd

Book Value

Fair Value

Book Value

Fair Value

Current Assets

190,000

240,000

50,000

62,000

Long Term Assets

600,000

500,000

300,000

275,000

Accumulated Depreciation

(130,000)

(50,000)

Total Assets

660,000

740,000

300,000

337,000

Current Liabilities

100,000

120,000

75,000

75,000

Common Stock

300,000

50,000

Capital in excess of Par Value

40,000

10,000

Retained Earnings

220,000

165,000

Total Liabilities

660,000

300,000

Zaid Ltd has 15,000 shares of its $20 par value shares outstanding on January 1, 20X3, and Zafar Ltd has 10,000 shares of $5 par value stock outstanding. The market values of the shares are $400 and $75, respectively.

Required:

Zaid Ltd issues 1,000 shares of stock in exchange for all of Zafar Ltds net assets. Prepare a balance sheet for the combined entity immediately following the merger.

Solution:

3. From the Given information Calculate the Book Value and pass Elimination entry: (2 Marks)

  1. PQR Ltd owns 75% of STV Ltd.
  2. STV Ltd s net income for 20X4 is SAR 250,000
  3. PQR Ltds net income for 20X4 from its own separate operations is SAR 500,000.
  1. STV Ltds declares dividends of SAR 36,000 during 20X4.
  2. STV Ltd has 20,000 shares of $5 par stock outstanding that were originally issued at $15 per share.
  3. STV Ltds beginning balance in Retained Earnings for 20X4 is SAR 150,000

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