20231123

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1. When a subsidiary reports goodwill on their balance sheet, the subsidiary's goodwill arose in a previous business combination in which they were the acquirer. 2. When acquiring a subsidiary with goodwill, the acquisition differential is calculated as if the goodwill had been written off by the subsidiary, even though in fact this is not the case. 3. The terms of a business combination may require an additional cash payment, or an additional share issue dependent on some specified future event. This is known a contingent consideration 4. Betty Developers Corp. purchased the common shares of Barb Materials Inc. for $550,000. However, the fair value of Barb Materials' net assets was $600,000. Which of the following is the journal entry to record the purchase of shares of Barb Materials? Dr: Investment in Bard 600000 Cr: cash 550000 Cr Gain 50000 Debit Investment in Barb Materials Inc. for $600,000; Credit Cash for $550,000 and Gain on Bargain Purchase for $50,000. 5. Topaz Corp. purchased all of Zircon Corp.'s common shares on January 1, 20X1. On the acquisition date, the book value of Zircon's assets is comprised of inventory of $45,000, land of $120,000, and equipment of $75,000. On the acquisition date, the fair values are: inventory $55,000, land $150,000, and equipment $80,000. Calculate the fair value increment of Zircon's assets. Reason: Fair value increment = ($55,000 - $45,000) + ($150,000 - $120,000) + ($80,000 - $75,000) = $10,000 + $30,000 + $5,000 = $45,000. 6. 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
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