Assume an investor purchases the net assets of an investee for the cash purchase price is $75,600. The investor is willing to pu
rchase the investee's business for this amount because the fair value of PPE is $70,560 and the fair value of a (previously unrecognized) customer list is $15,120 (the fair values of all other assets and liabilities are equal to their book values). The investee company reports the following balance sheet on the acquisition date: Cash $2,800 Accounts payable $5,600
Accounts receivable 5,600 Accrued liabilities 8,400
Inventories 11,200 -
Current assets 19,600 Current liabilities 14,000
Long-term liabilities 11,200
PPE, net 28,000 Stockholdersâ equity 22,400
Total assets $47,600 Total liabilities and equity $47,600
Required:
Provide the journal entry if the investor pays cash and purchases the assets and assumes the liabilities of the investee company (assume that the fair value of the assets is equal to their book values).
Here all the assets are debited as it increased the assets and credited all the liabilities except cash as it increased the liabilities and the remaining balance left would be credited to cash account
Indirect losses refers to a type of loss that incurred outside of circumstances that usually occur in normal operation. (such as loss because the government created a certain type of law or loss because people are conducting strikes on other areas of our business)
Insurance companies can't cover Indirect losses because these costs tend to be really unpredictable and extremely hard to be measured . They will specify that they wouldn't cover these types of loss during the initial cotnract.
<span>Marketing costs are not a financial cost of a recall. Marketing involves the process of getting offerings out to consumers who would likely purchase the item (or whom the company would like to purchase the item). Here, with a recall, the company is not attempting to sell anything new, but rather, they are attempting to fix a manufacturing defect.</span>
However, the reduction in expenditure on export subsidies <u>decreases </u>the fiscal deficit, thereby <u>increasing</u> public saving.
National savings refers to the sum of public and private savings. Public savings is the government budget balance. An increase in the balance or decrease in deficit implies the public savings increase and also increase in national savings. Then, the decrease in subsidy spending decreases government deficit and increases national savings and supply of loanable funds, so the loanable funds shift to the right.
