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zhenek [66]
3 years ago
5

The P Ltd acquires all issued capital of the S Ltd for a consideration of $1,000,000 cash and 800,000 shares eachvalued at $1.50

. The summary statement of the financial position of the subsidiary company immediatelyfollowing the acquisition is:Fair value of assets acquired $2,640,000Fair value of liabilities acquired $720,000Total shareholders’ equity of the subsidiary company $800,000Retained earnings of the subsidiary company $1,120,000Required:(a) Pass the necessary journal entry to record the acquisition (2 marks)(b) Determine the amount of goodwill (or bargain purchase) arising out of the acquisition (2 marks)(c) Pass the necessary consolidation entry to eliminate the subsidiary by the parent company (2 marks)(d) Determine the amount of goodwill (or bargain purchase) arising out of the acquisition if the purchase consideration paid was $1,000,000 cash and 400,000 shares each valued at $1.50 (1 marks)
Business
1 answer:
qaws [65]3 years ago
7 0

Answer and Explanation:

a. The Journal entry is shown below:-

Investment Dr,  $2,200,000

         To Cash $1,000,000

         To Common Shares $1,200,000 (800,000 × $1.50)

(Being the acquisition is recorded)

b. The computation of amount of goodwill is shown below:-

Net assets = Fair value of assets - Fair value of liabilities

= $2,640,000 - $720,000

= $1,920,000

Amount of goodwill = Purchase consideration - Net assets

= $1,920,000 - ($1,000,000 + $1,200,000)

= $280,000

c. The Journal entry is shown below:-

Purchase of assets Dr, $2,640,000

Goodwill Dr, $280,000

         To Purchase of liabilities $720,000

          To Investment $2,200,000

(Being consolidation entry is recorded)

d. The computation of amount of goodwill is shown below:-

Net assets = Fair value of assets - Fair value of liabilities

= $2,640,000 - $720,000

= $1,920,000

Amount of goodwill = Net assets - Purchase consideration

= $1,920,000 - ($1,000,000 + $400,000 × $1.50)

= $1,920,000 - $1,600,000

= $320,000

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A self-directed work team (SDWT) is a group of people who are responsible for an entire business operation. There us generally very little input from a manager or supervisor.

Self-directed teams will generally not report to a manager.  Correct answer: D

These teams are empowered to make the decisions needed to manage themselves on a day-to-day basis

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Webster is a talented baker and has a degree in business management. He wants to own his own chain of incorporated bakeries one
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Answer: High up-front costs.

Explanation:

Webster's limitation to owning a chain of incorporated bakeries would be the high up-front cost or capital needed to start up the company.

The up-front costs as in the case of the question is the money needed to start up the bakery company.

3 0
3 years ago
In 2017, Oriole Corporation reported net income of $1,004,700. It declared and paid preferred stock dividends of $278,600. Durin
nexus9112 [7]

Answer:

$3.62

Explanation:

The dividend distributed to common share = total net income - dividend for preferred stock

=  $1,004,700 -  $278,600

=  $726,100

Earnings per share (EPS) = The dividend distributed to common share / common shares outstanding

= $726,100/ 200700

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4 0
3 years ago
At MultiMarkets, a chain of retail stores, top management decided to respond to the growing challenge of online retail websites
Kobotan [32]

Answer:

False

  • At MultiMarkets, a chain of retail stores, top management decided to respond to the growing challenge of online retail websites with <u>DECENTRALIZED</u> planning , using planning experts to help store managers develop their own plans.

Explanation:

In a corporation, decentralized planning means that some planning functions and decision making processes are delegated to lower level managers.

In this case, MultiMarkets' upper management is delegating planning functions to local store managers as a way to respond to an increase in online retailing.

4 0
3 years ago
Green Co. paid $28,400 in dividends and $29,571 in interest over the past year. During the year, net working capital increased f
inn [45]

If Green Co. paid $28,400 in dividends and $29,571 in interest over the past year. During the year, net working capital increased from $13,986 to $18,719.  During the year, the company issued $25,500 in new equity and paid off $21,700 in long-term debt. What the company's cash flow from assets will be is: $48,371

First step is to calculate the cash flow to creditor  

Cash flow to creditors   = $21,700 + $29,571  

Cash flow to creditors   = $51,271

 

Second step is to calculate the cash flow to Stockholders

Cash flow to Stockholders =$28,400 - $25,500  

Cash flow to Stockholders =$2,900

Now let determine the cash flow from assets using this formula

Cash flow from assets = Cash flow to creditors + Cash flow to stockholders

Let plug in the formula  

Cash flow from assets = $51,271 + $2,900  

Cash flow from assets = $48,371

Inconclusion if Green Co. paid $28,400 in dividends and $29,571 in interest over the past year. During the year, net working capital increased from $13,986 to $18,719.  During the year, the company issued $25,500 in new equity and paid off $21,700 in long-term debt. What the company's cash flow from assets will be is: $48,371

Learn more here:

brainly.com/question/11009567

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