Reference no: EM132225191
Advanced Financial Accounting Assignment -
Q1. Explain the term Acquisition and investments in inter-corporate Entities.
Q2. X Inc. acquired 100% of the outstanding common stock of Y Inc. for $250,000 cash and 20,000 shares of its own common stock ($5 par value), which was trading at $10 per share at the acquisition date. The estimated fair market values of assets, liabilities, and equity accounts of Y. Inc are as follows:
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Accounts Receivable $100,000
Inventory 50,000
LT Marketable sec. 60,000
PP&E 140,000
Total Assets $350,000
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Liabilities $200,000
Retained Earnings 50,000
Common Stock 100,000
Total Liab/Equity $ 350,000
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Require:
1. Calculate Acquisition cost of X. Inc.
2. Calculate Good will of X. Inc.
3. Pass journal entry in books of X. Inc.
Q3. SALMAN Company acquires 60 percent of HAMAD Company's common stock for $200,000 at the beginning of the year and gains significant influence over HAMAD. During the year, HAMAD has net income of $40,000 and pays dividends of $30,000.
Required: Prepare the journal entries in books of SALMAN company under the Equity and Cost Method
Q4. From the Given information Calculate the Book Value and pass Basic Elimination entry:
1. PQR Ltd owns 100% of STV Ltd.
2. STV Ltd 's net income for 20X4 is SAR 250,000
3. STV Ltd's declares dividends of SAR 36,000 during 20X4.
4. STV Ltd has 20,000 shares of $5 par stock outstanding that were originally issued at $15 per share.
5. STV Ltd's beginning balance in Retained Earnings for 20X4 is SAR 150,000.
Q5. How are direct combination costs, contingent consideration, and a bargain purchase reflected in recording an acquisition transaction?