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can you help me out by explaining in detail 1. Assume that company A issues 10,000 shares ($ 20 par value common stock and currently
can you help me out by explaining in detail
1. Assume that company A issues 10,000 shares ($ 20 par value common stock and currently selling at $ 100 per share) and pays $ 750,000 for all of company B assets and liabilities and company B dissolved as a legal entity. Additional information To process the business combination company A pays the following amounts. Secretarial and administrative costs of $ 7,500 $ 10,000 to SEC for getting registered the new common stock issued by company A $ 5000 accounting and attorney fees. The following balance sheet was prepared during the date of business combination (assume values are giving in US $). Accounts Company B Company A stock value Dec 31, 2016 1,000,000 Current assets Book value Dec 31, Fair value Dec 2, 2018 2018 PPI Long term debts Net assets Common stock ETB 30 5,000,000 1,500,000 3,500,000 4,000,000 100,000 200,000 1,000,000 1,000,000 200,000 1,500,000 per share Common stock ETB 50 500,000 per share 500,000 100,000 Additional paid in capital Retained earnings Owners' equity 1,000,000 5,500,000 400,000 1,000,000 Required: based on the above information answer the following question. a. Prepare the necessary journal entries. b. Prepare consolidated balance sheet on the data of business combination and the consolidation working paper journal entries. 2. DC company acquires all of the outstanding common stock of NW company for 2,000,000 cash. The balance sheet of NW company is given below. Book value 1/1/2019 400,000 500,0000 Fair values 1/1/2019 400,000 800,000 Current assets Patented technology (20 years) PPE (property plant and equipment) (10 years) Bonds 1,200,000 1,300,000 300,000 1,800,000 300,000 2,400,000 Net book value Common stock Additional paid in capital Retained earnings Assume NW company earns $ 500,000 income in 2019 and pays $200,000 cash divided July 31/2019, Required: a. Allocate the amount consideration to the appropriate accounts on the data of business combination. b. Compute the amortization amount. c. Record the necessary journal entries (think 5 journal entries) d. It is known that for the first year, the parent prepares five entries on the work paper consolidate the two companies. Record the journal entries under equity method accounting, go III OStep by Step Solution
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