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On January 1, 2009, Rand Corp. issued shares of its common stock to acquire all of the outstanding common stock of Spaulding Inc. Spaulding's book value was only $140,000 at the time, but Rand issued 12,000 shares having a par value of $1 per share and a fair value of $20 per share. Rand was willing to convey these shares because it felt that buildings (ten-year life) were undervalued on Spaulding's records by $60,000 while equipment (five-year life) was undervalued by $25,000. Any consideration transferred over fair value of identified net assets acquired is assigned to goodwill.
Following are the individual financial records for these two companies for the year ended December 31, 2012.
Required:
Prepare a consolidation worksheet for this business combination.
Calculate the combined pre-determined OH rate using (1) units of production (2) machine hours: 40,000 machine hours, variable mfg OH $80,000, Fixed mfg OH $325,000. The company expects to produce 10,000 units and each product requires 4 hours of m..
One of your audit clients has a material investment in a privately-held biosciences company. Your audit firm engaged a business valuation specialist to assist in evaluating the client's estimation of the investment's fair value. You conclude that ..
If the beginning balance in OAA is $3,900, and the following transactions occur, what is the ending OAA balance?
Suppose there are 360 business days in the year. What was the number of days' sales outstanding in average receivables and the number of days' sales outstanding in average inventories for 2011, respectively.
Under what circumstances would you not want to normalize a table? Finally, do you feel the advantages of normalization outweigh the disadvantages?
Erik Co. elects to use the percentage-of-sales basis in 2012 to record bad debts expense. It estimates that 3% of net credit sales will become uncollectible. Sales are $808,455 for 2012, sales returns and allowances are $47,894, and the allowance ..
Your friend, Wendy Geiger, owns a small retail store that sells canies and nuts. Geiger acquires her goods from a few select vendors. She generally makes purchase orders by phone and on credit. Sales are primarily for cash. Geiger keeps her own ma..
If a parent company and outside investors purchase shares of a subsidiary in relation to existing stock ownership (ratably).
Kordel Inc. acquired 75% of the outstanding common stock of Raxston Corp. Raxston currently owes Kordel $500,000 for inventory acquired over the past few months.
Write a 2- to 3-page memo to the file, evaluating the merits of the position taken by the IRS. Use the IRAC Tax memo format: Issue, Ruling, Analysis, and Conclusion.
A common question when making a capital budgeting decision is whether to lease or buy an asset. This is akin to the 'make or buy choice' that is often faced by management accountants.
1. Record the transactions in the journal. 2. Prepare the statement of shareholders' equity for 20XX.
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