1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
MrMuchimi
3 years ago
14

A parent company exchanges 30,000 shares of its $1 par value common stock, with a market value of $10/share, for all of the shar

es owned by the subsidiary's shareholders, resulting in a $300,000 total purchase price. On the acquisition date, the subsidiary reported a book value of Stockholders' Equity of $225,000, comprised of $90,000 of Common Stock and $135,000 of Retained Earnings. An examination of the subsidiary's balance sheet revealed that book values were equal to fair values for all assets except for PPE (net), which has a book value of $120,000 and a fair value of $195,000.
Required:
Prepare the entry that the parent makes to record the investment.
Business
1 answer:
Ivan3 years ago
8 0

Answer:

Common Stock $90,000 (debit)

Retained Earnings $135,000 (debit)

Revaluation Reserve $75,000 debit)

Investment in Subsidiary $300,000 (credit)

Explanation:

The Parent (Investor) acquires the Assets and Liabilities (or Equity) of the Subsidiary (Investee) at their Acquisition date fair values.

Any excess of the Purchase Consideration over the Net Assets/ Equity taken over is known as Goodwill and is shown in the Consolidated financial Statements of the Group.

The above shows the elimination journal entry that would be prepared at the acquisition date. The Revaluation reserve has been created to adjust the fair value of PPE. There is no goodwill.

You might be interested in
A new manufacturing machine is expected to cost $278,000, have an eight-year life, and a $30,000 salvage value. The machine will
oksano4ka [1.4K]

Answer:

C) 4.2 years

Explanation:

The computation of the payback period is as follows;

As we know that

Payback Period = Initial cost ÷ Annual net cash flow

Here

Initial cost = $278000

Annual net cash flow = Incremental after tax + Depreciation per year

where,  

Depreciation per year = (Original cost - Salvage value) ÷ Estimated Life

= ($278,000 - $30,000) ÷ 8 years

= $31,000

Annual net cash flow is

= $35000 + $31000

= $66000

So,

Payback Period is

= $278000 ÷ $66000

= 4.2 Years

4 0
3 years ago
Characteristics of capital projects include: Group of answer choices Involves long-lived assets Usually requires long-range plan
Verdich [7]

Characteristics of capital projects include (B) usually requires long-range planning and extensive financing.

<h3>What are capital projects?</h3>
  • A Capital Project is one that serves to maintain or improve a City asset, also known as infrastructure.
  • A project must meet ONE of the following requirements (criteria) to be included in the Capital Budget.
  • It is a project that involves the construction, enlargement, renovation, or replacement of an existing building or facilities.
<h3>Characteristics of capital projects:</h3>
  1. Long-lasting assets are involved (e.g, buildings, roads and bridges, etc.)
  2. A construction project is usually included.
  3. Long-term planning and extensive financing are usually required.
  4. Maintain a project-life emphasis rather than a year-to-year concentration.

Therefore, characteristics of capital projects include (B) usually require long-range planning and extensive financing.

Know more about capital projects here:

brainly.com/question/7442083

#SPJ4

Correct question:

Characteristics of capital projects include:

Group of answer choices -

(A) Involves long-lived assets.

(B) Usually requires long-range planning and extensive financing.

(C) Usually has a year-to-year focus.

4 0
1 year ago
Some large hardware stores, such as Home Depot, boast of carrying as many as 20,000 different products in each store. This volum
jeyben [28]

Answer:

C. The choice of consumers regarding what to purchase to satisfy their wants and the choice of producers regarding what to produce to maximize profits.

Explanation:

The extremely large amount of products that large hardware stores, such as Office Depot, carry, are most likely a consequence of the combination of these factors. On the one hand, the customers who go to this stores have a particular want, and their purchases are intended to satisfy these wants. On the other hand, the producers also have to make a choice, and they generally chose the products that are most likely to maximize their profits.

5 0
2 years ago
How long do you have to pay back a short term debt?
Temka [501]
I think that the answer is D all of the above
8 0
2 years ago
Read 2 more answers
If a one-year bond has a face value of $5,000 and is sold for $4,500, what is the interest rate on the bond?
Arada [10]

Answer:

11.1%

Explanation:

The face value is $5000

It is sold for $4,500

Therefore the interest rate of this bond can be calculated as follows

$5000-$4500

= 500

500/4500 × 100

= 0.111 × 100

= 11.1%

Hence the interest rate is 11.1%

6 0
2 years ago
Other questions:
  • When Nike purchases it's raw materials it wants to ensure they meet a specific quality management standard worldwide. This will
    13·1 answer
  • Farmer and Taylor formed a partnership with capital contributions of $250,000 and $300,000, respectively. Their partnership agre
    12·1 answer
  • A cause can have many final manifestations. this is referred to as
    14·1 answer
  • Ducheyne Electric recently declared a 15 percent stock dividend. On the date of the stock dividend Ducheyne had 16 million share
    11·1 answer
  • unlike other types of play, dramatic play is purely for fun and is not meant to be a learning experience. True or False
    13·1 answer
  • A customer invests $100,000 in a real estate limited partnership. In the first year of operations, the investor is allocated $20
    7·1 answer
  • A local barnes and noble bookstore ordered 80 marketing books but received 60 books. what percent of the order was missing?
    6·2 answers
  • Galvin grew up on a farm. He worked on his father’s farm and then inherited the business when his dad retired. For which career
    7·2 answers
  • Chick-fil-a released a statement to explain their partnership with Thrive Coffee and how the company is working to support local
    6·1 answer
  • Market competition is described as a:
    10·2 answers
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!