Nipissing University **We aren't endorsed by this school
ACCT 4866
Nov 14, 2023
Uploaded by thuynguyen1043012 on coursehero.com
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1. Assume a company purchases the shares of another company by paying cash. The acquirer company pays less than the fair value of the company's net assets. Which of the following accounts is credited in the journal entry to record the purchase of the shares? (select all that apply) Gain on Bargain Purchase Cash 2. 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 and this amount is attributable to Goodwill 3. Which of the following amounts is recorded as goodwill? The excess of the consideration given and the non-controlling interest over the fair value of the subsidiary company's net assets 4. uildhat Inc. purchased a 95% stake in Rayzone Corp.'s common shares for $600,000 on January 1, 20X1. The fair value of the 5% non-controlling interest is $31,580. Rayzone's common shares and retained earnings are recorded at $250,000 and $300,000, respectively. Rayzone appraised the land and buildings and determined that they are undervalued by $100,000. Calculate Buildhat's share of the Rayzone's book value of net assets. Reason: The total book value of Rayzone is $550,000. This is apportioned in the ratio of 95:5 between Buildhat and the existing non-controlling interests of Rayzone. Share of Buildhat = 95% × $550,000 = $522,500. 5. IFRS 3 Business Combinations states that a gain on a bargain purchase can only be recognized by the __ acquirer ______.
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