20231125

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School
Nipissing University **We aren't endorsed by this school
Course
ACCT 4866
Subject
Accounting
Date
Nov 14, 2023
Pages
1
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1. A company acquires 100% of the common shares of another company for $500,000. The book value of the net assets of the subsidiary company is $400,000. The fair value increment of the assets of the subsidiary company is $80,000. The excess of the total acquisition differential over the fair value increment is $ 20000 (=500000-400000-80000) and this amount is attributable to Goodwill 2. The excess of the consideration given and the non-controlling interest over the fair value of a subsidiary company's net assets is recorded as goodwill 3. Emerald Corp. acquires 80% of Zircon Inc.'s outstanding common shares. Zircon Inc. reports common shares of $350,000 and retained earnings of $200,000 on its balance sheet. Emerald's share of the book value of Zircon's net assets is $ 440000 80% * (350000+200000) 4. In a business combination, acquirers frequently ___ must pay a premium _____ price per share to garner sufficient shares to ensure a controlling interest 5. Rafe Group Inc. has purchased 60% of Safe Corp.'s outstanding common shares for a $60,000 cash payment on October 15, 20X3. How would Rafe Group record the transaction on its books? Dr: Investment in Safe $60,000 Cr: Cash 60,000 ->Debit Investments in Safe Corp. account for $60,000; Credit Cash for $60,000. 39. Ivory Inc. reports common shares of $60,000, contributed surplus of $500,000, and retained earnings of $360,000. The non-controlling interest in the net assets of its subsidiary is $70,000. Calculate the total consolidated shareholders' equity under the entity theory. Reason: Total shareholders' equity = Total controlling interest + Non-controlling interest in subsidiary company = ($60,000 + $500,000 + $360,000) + $70,000 = $990,000. 6. The non-controlling interest's share of goodwill ___is not_____ reported under the identifiable net asset (INA) method. 7. If a company acquires the shares of another company at a price less than the fair value of the company's net assets, the difference between the acquisition price and the fair value of net assets is recorded in which of the following accounts? Gain on Bargain Purchase
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