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