Advanced Financial Accounting 12th Edition by Theodore Christensen solution manual

 
b. Journal entry recorded by Skine Company for receipt of assets and accounts payable from Phoster Corporation:
 
 
Cash
15,000
 

 
Accounts Receivable
24,000
 

 
Inventory
9,000
 

 
Land
3,000
 

 
Depreciable Assets
65,000
 

 
     Accumulated Depreciation
 
28,000

 
     Accounts Payable
 
22,000

 
     Common Stock
 
48,000

 
     Additional Paid-In Capital
 
18,000

 
 

 
 
E1-8  Acquisition of Net Assets
 
Pun Corporation will record the following journal entries:

 
(1)
Assets
71,000
 

 
Goodwill
9,000
 

 
     Liabilities
 
20,000

 
     Cash
 
60,000

 
 
 
 

(2)
Merger Expense
4,000
 

 
     Cash
 
4,000

 
 
E1-9  Reporting Goodwill
 
a. Goodwill:  $120,000  =  $310,000 - $190,000
      Investment:  $310,000
 
b. Goodwill:  $6,000  =  $196,000 - $190,000
      Investment:  $196,000
 
c. Goodwill:  $0; no goodwill is recorded when the purchase price is below the fair
          value of the net identifiable assets.
    Investment:  $190,000; recorded at the fair value of the net identifiable assets.
 
 
E1-10  Stock Acquisition
 
 
Journal entry to record the purchase of Sippy Inc., shares:
 

 
 
 
 

 
Investment in Sippy Inc., Common Stock
986,000
 

 
     Common Stock
 
425,000

 
     Additional Paid-In Capital
 
561,000

 
 
 
 

 
  $986,000 = $58 x 17,000 shares
 
 

 
  $425,000 = $25 x 17,000 shares
 
 

 
  $561,000 = ($58 - $25) x 17,000 shares
 
 

 

E1-11  Balances Reported Following Combination
 
a.
Stock Outstanding: $200,000 + ($10 x 8,000 shares)
$280,000

 
 
 

b.
Cash and Receivables: $150,000 + $40,000
190,000

 
 
 

c.
Land: $100,000 + $85,000
185,000

 
 
 

d.
Buildings and Equipment (net): $300,000 + $230,000
530,000

 
 
 

e.
Goodwill: ($50 x 8,000) - $355,000
45,000

 
 
 

f.
Additional Paid-In Capital:
  $20,000 + [($50 - $10) x 8,000]
340,000

 
 
 

g.
Retained Earnings
330,000

 
 
E1-12  Goodwill Recognition
 
Journal entry to record acquisition of Spur Corporation net assets:
 
 
Cash and Receivables
40,000
 

 
Inventory
150,000
 

 
Land
30,000
 

 
Plant and Equipment
350,000
 

 
Patent
130,000
 

 
Goodwill
55,000
 

 
     Accounts Payable
 
85,000

 
     Cash
 
670,000

 
Computation of goodwill
 
 
Fair value of consideration given
 
$670,000

 
Fair value of assets acquired
$700,000 
 

 
Fair value of liabilities assumed
  (85,000)
 

 
Fair value of net assets acquired
 
 615,000

 
Goodwill
 
$   55,000

 
 
 
 

E1-13  Acquisition Using Debentures