Question: Pham Company acquired the assets (except for

> Contrast the consolidated effects of the parent company concept and the economic entity concept in terms of: (a) The treatment of noncontrolling interests. (b) The elimination of intercompany profits. (c) The valuation of subsidiary net assets in the con

> Describe the difference between the economic entity concept and the parent company concept approaches to the reporting of subsidiary assets and liabilities in the consolidated financial statements on the date of the acquisition.

> Explain the difference between an accretive and a dilutive acquisition.

> Explain the potential advantages of a stock acquisition over an asset acquisition.

> Define some defensive measures used by target firms to avoid a takeover. Are these measures beneficial for shareholders?

> Give several reasons why a parent company would be willing to pay more than book value for subsidiary stock acquired.

> A consolidated income statement for 2013 and comparative consolidated balance sheets for 2012 and 2013 for P Company and its 80% owned subsidiary follow: Other information: 1. Equipment depreciation was $95,000. 2. Equipment was purchased during the

> When contingent consideration in an acquisition is based on the acquirer issuing its shares to the seller, how should this contingency be reflected on the acquisition date?

> Distinguish among a statutory merger, a statutory consolidation, and a stock acquisition.

> AOL announced that because of an accounting change (FASB Statements Nos. 141R [ASC 805] and 142 [ASC 350]), earnings would be increasing over the next 25 years by $5.9 billion a year. What change(s) required by FASB (in SFAS Nos. 141R and 142) resulted i

> How would a company determine whether goodwill has been impaired?

> List four advantages of a business combination as compared to internal expansion.

> Distinguish between internal and external expansion of a firm.

> On January 1, 2014, Pump Company acquired all the outstanding common stock of Sound Company for $556,000 in cash. Financial data relating to Sound Company on January 1, 2014, are presented here: Sound Company would expect to pay 10% interest to borrow

> Patten Corporation acquired an 85% interest in Savage Company for $3,100,000 on January 1, 2014. On this date, the balances in Savage Company’s capital stock and retained earnings accounts were $2,000,000 and $700,000, The remaining use

> On January 1, 2014, Pueblo Corporation purchased a 75% interest in Sanchez Company for $900,000. A summary of Sanchez Company’s balance sheet at date of purchase follows: The equipment had an original life of 15 years and remaining us

> On January 1, 2014, Perini Company purchased an 85% interest in Silvas Company for $400,000. On this date, Silvas Company had common stock of $90,000 and retained earnings of $210,000. An examination of Silvas Company’s assets and liabi

> Pillow Company purchased 90% of the common stock of Satin Company on May 1, 2011, for a cash payment of $474,000. December 31, 2011, trial balances for Pillow and Satin were: Satin Company declared a $60,000 cash dividend on December 20, 2011, payable

> On January 1, 2014, Palmer Company acquired a 90% interest in Stevens Company at a cost of $1,000,000. At the purchase date, Stevens Company’s stockholders’ equity consisted of the following: Common stock â&#128

> On January 1, 2013, Porter Company purchased an 80% interest in the capital stock of Salem Company for $850,000. At that time, Salem Company had capital stock of $550,000 and retained earnings of $80,000. Differences between the fair value and the book v

> Perke Corporation purchased 80% of the stock of Superstition Company for $1,970,000 on January 1, 2015. On this date, the fair value of the assets and liabilities of Superstition Company was equal to their book value except for the inventory and equipmen

> On January 1, 2014, Paxton Company purchased a 70% interest in Sagon Company for $1,300,000, at which time Sagon Company had retained earnings of $500,000 and capital stock of $1,000,000. On January 1, 2014, the fair value of the assets and liabilities o

> The Mcquire Company is considering acquiring 100% of the Sosa Company. The management of Mcquire fears that the acquisition price may be too high. Condensed financial statements for Sosa Company for the current year are as follows: You believe that Sos

> On January 1, 2014, Palmer Company acquired a 90% interest in Stevens Company at a cost of $1,000,000. At the purchase date, Stevens Company’s stockholders’ equity consisted of the following: Common stock â&#128

> (Note that this is the same problem as Problem 5-4 and Problem 5-11, but assuming the use of the complete equity method.) On January 1, 2013, Porter Company purchased an 80% interest in the capital stock of Salem Company for $850,000. At that time, Salem

> On January 1, 2012, Push Company purchased an 80% interest in the capital stock of Way-Down Company for $820,000. At that time, WayDown Company had capital stock of $500,000 and retained earnings of $100,000. Differences between the fair value and the bo

> On January 2, 2014, Press Company purchased on the open market 90% of the outstanding common stock of Sensor Company for $800,000 cash. Balance sheets for Press Company and Sensor Company on January 1, 2014, just before the stock acquisition by Press Com

> (Note that this is the same problem as Problem 5-5, but assuming the use of the partial equity method.) On January 1, 2014, Palmer Company acquired a 90% interest in Stevens Company at a cost of $1,000,000. At the purchase date, Stevens Companyâ&#1

> Punca Company purchased 85% of the common stock of Surrano Company on July 1, 2012, for a cash payment of $590,000. December 31, 2012, trial balances for Punca and Surrano were: Surrano Company declared a $50,000 cash dividend on December 20, 2012, pay

> (Note that this is the same problem as Problem 5-4, but assuming the use of the partial equity method.) On January 1, 2013, Porter Company purchased an 80% interest in the capital stock of Salem Company for $850,000. At that time, Salem Company had capit

> Pearson Company purchased a 100% interest in Sanders Company and a 90% interest in Taylor Company on January 2, 2014, for $800,000 and $1,300,000, respectively. The account balances and fair values of the acquired companies on the acquisition date were a

> On January 1, 2014, Palmero Company purchased an 80% interest in Santos Company for $2,800,000, at which time Santos Company had retained earnings of $1,000,000 and capital stock of $500,000. On the date of acquisition, the fair value of the assets and l

> (This is a continuation of Problem 4-21) Pequity Company purchased 85% of the common stock of Sequity Company on April 1, Year 1 for total consideration of $545,000 cash plus $50,000 of contingent consideration as measured according to GAAP at fair value

> (This is a continuation of Problem 4-20.) Pcost Company purchased 85% of the common stock of Scost Company on April 1, Year 1 for total consideration of $545,000 cash plus $50,000 of contingent consideration as measured according to GAAP at fair value.

> On January 1, 2015, Pruitt Company issued 25,500 shares of its common stock ($2 par) in exchange for 85% of the outstanding common stock of Shah Company. Pruitt’s common stock had a fair value of $28 per share at that time. Pruitt Compa

> Balance sheets for Prego Company and Sprague Company as of December 31, 2013, follow: The fair values of Sprague Company’s assets and liabilities are equal to their book values. Required: Prepare a consolidated balance sheet as of

> On July 31, 2014, Ping Company purchased 90% of Santos Company’s common stock for $2,010,000 cash. Immediately after the acquisition, the two companies’ balance sheets were as follows: Santos Company has not yet rec

> On January 1, 2014, Pat Company purchased 90% of the outstanding common stock of Solo Company for $236,000 cash. The balance sheet for Pat Company just before the acquisition of Solo Company stock, along with the consolidated balance sheet prepared at th

> On January 2, 2014, Phillips Company purchased 80% of Sanchez Company and 90% of Thomas Company for $225,000 and $168,000, respectively. Immediately before the acquisitions, the balance sheets of the three companies were as follows: The note receivab

> (Note that this problem is the same as Problem 4-9, but assuming the use of the partial equity method.) December 31, 2014, trial balances for Pledge Company and its subsidiary Stom Company follow: Pledge Company purchased 72,000 shares of Stom Company&

> Balance sheets for P Company and S Company on August 1, 2014, are as follows: Required: Prepare a workpaper for a consolidated balance sheet for P Company and its subsidiary on August 1, 2014, taking into consideration the following: 1. P Company acqui

> On January 1, 2014, Perry Company purchased 8,000 shares of Soho Company’s common stock for $120,000. Immediately after the stock acquisition, the statements of financial position of Perry and Soho appeared as follows: Required: A. Ca

> The two following separate cases show the financial position of a parent company and its subsidiary company on November 30, 2014, just after the parent had purchased 90% of the subsidiary’s stock: Required: A. Prepare a November 30, 2

> On January 1, 2015, Pruitt Company issued 25,500 shares of its common stock in exchange for 85% of the outstanding common stock of Shah Company. Pruitt’s common stock had a fair value of $28 per share at that time (par value of $2 per s

> On January 1, 2015, Pope Company purchased 90% of Sun Company’s common stock for $5,800,000 cash. Immediately after the acquisition, the two companies’ balance sheets were as follows: Sun Company’s

> On February 1, 2014, Punto Company purchased 95% of the outstanding common stock of Sara Company and 85% of the outstanding common stock of Rob Company. Immediately before the two acquisitions, balance sheets of the three companies were as follows: The

> On January 1, 2015, Pruitt Company issued 30,000 shares of its $2 par value common stock for the net assets of Shah Company in a statutory merger accounted for as a purchase. Pruitt’s common stock had a fair value of $28 per share at th

> Spalding Company has offered to sell to Ping Company its assets at their book values plus $1,800,000 representing payment for goodwill. Operating data for 2013 for the two companies are as follows: Ping Company’s management estimates the f

> Balance sheets for Salt Company and Pepper Company on December 31, 2013, follow: Pepper Company tentatively plans to issue 30,000 shares of its $20 par value stock, which has a current market value of $37 per share net of commissions and other issue co

> On January 1, 2012, Parker Company purchased 90% of the outstanding common stock of Sid Company for $180,000. At that time, Sid’s stockholders’ equity consisted of common stock, $120,000; other contributed capital, $20

> On January 1, 2014, Perez Company acquired all the assets and assumed all the liabilities of Stalton Company and merged Stalton into Perez. In exchange for the net assets of Stalton, Perez gave its bonds payable with a maturity value of $600,000, a state

> Stockholders of Acme Company, Baltic Company, and Colt Company are considering alternative arrangements for a business combination. Balance sheets and the fair values of each company’s assets on October 1, 2014, were as follows: Acme

> Condensed balance sheets for Phillips Company and Solina Company on January 1, 2013, are as follows: On January 1, 2013, the stockholders of Phillips and Solina agreed to a consolidation. Because FASB requires that one party be recognized as the acquir

> A 90% interest in Saxton Corporation was purchased by Palm Incorporated on January 2, 2014. The capital stock balance of Saxton Corporation was $3,000,000 on this date, and the balance in retained earnings was $1,000,000. The cost of the investment to Pa

> Pascal Corporation purchased 90% of the stock of Salzer Company for $2,070,000 on January 1, 2015. On this date, the fair value of the assets and liabilities of Salzer Company was equal to their book value except for the inventory and equipment accounts.

> A 90% interest in Saxton Corporation was purchased by Palm Incorporated on January 2, 2014. The capital stock balance of Saxton Corporation was $3,000,000 on this date, and the balance in retained earnings was $1,000,000. The cost of the investment to Pa

> On January 1, 2013, Piper Company acquired an 80% interest in Sand Company for $2,276,000. At that time the capital stock and retained earnings of Sand Company were $1,800,000 and $700,000, respectively. Differences between the fair value and the book va

> On January 2, 2013, Page Corporation acquired a 90% interest in Salcedo Company for $3,500,000. At that time Salcedo Company had capital stock of $2,250,000 and retained earnings of $1,250,000. The book values of Salcedo Company’s assets and liabilities

> On January 1, 2013, Pam Company purchased an 85% interest in Shaw Company for $540,000. On this date, Shaw Company had common stock of $400,000 and retained earnings of $140,000. An examination of Shaw Company’s assets and liabilities r

> On October 1, 2015, Para Company purchased 90% of the outstanding common stock of Star Company for $210,000. Additional data concerning Star Company for 2015 follows: Common stock …………………………………………….$70,000 Other contributed capital……………………………….. 30,000

> (Note that this is the same problem as Problem 4-7, but assuming the use of the partial equity method.) Price Company purchased 90% of the outstanding common stock of Score Company on January 1, 2011, for $450,000. At that time, Score Company had stockho

> On May 1, 2015, Peters Company purchased 80% of the common stock of Smith Company for $50,000. Additional data concerning these two companies for the years 2015 and 2016 are: Any difference between book value and the value implied by the purchase price

> Continue the situation in Exercise 4-6 and assume that during 2015 Sales Company earned $190,000 and declared and paid a $50,000 dividend. Required: A. Prepare the investment-related entries on Pert Company’s books for 2015. B. Prepare the workpaper elim

> On January 1, 2014, Pert Company purchased 85% of the outstanding common stock of Sales Company for $350,000. On that date, Sales Company’s stockholders’ equity consisted of common stock, $100,000; other contributed capital, $40,000; and retained earning

> On January 1, 2014, Plate Company purchased a 90% interest in the common stock of Set Company for $650,000, an amount $20,000 in excess of the book value of equity acquired. The excess relates to the understatement of Set Company’s land

> Poco Company purchased 85% of the outstanding common stock of Serena Company on December 31, 2014, for $310,000 cash. On that date, Serena Company’s stockholders’ equity consisted of the following: Common stock……………………………………………. $240,000 Other contribu

> At the beginning of 2009, Presidio Company purchased 95% of the common stock of Succo Company for $494,000. On that date, Succo Company’s stockholders’ equity consisted of the following: Common stock…………………………………………. $300,000 Other contributed capital

> Park Company purchased 90% of the stock of Salt Company on January 1, 2014, for $465,000, an amount equal to $15,000 in excess of the book value of equity acquired. This excess payment relates to an undervaluation of Salt Company’s land. On the date of p

> On January 1, 2014, Plenty Company purchased a 70% interest in the common stock of Set Company for $650,000, an amount $20,000 in excess of the book value of equity acquired. The excess relates to the understatement of Set Company’s lan

> Badco Inc. purchased a 90% interest in Lazytoo Company for $600,000 cash on January 1, 2016. Any excess of implied over book value was attributed to depreciable assets with a 15-year remaining life (straight-line depreciation). To help pay for the acquis

> The following accounts appeared in the separate financial statements at the end of 2014 for Pressing Inc. and its wholly-owned subsidiary, Stressing Inc. Stressing was acquired in 2009. Required: 1. How can you determine whether Pressing is using the c

> Poco Company purchased 80% of Solo Company’s common stock on January 1, 2012, for $250,000. On December 31, 2012, the companies prepared the following trial balances: Required: Prepare a consolidated statements workpaper on December

> Plantation Homes Company is considering the acquisition of Condominiums, Inc. early in 2015. To assess the amount, it might be willing to pay, Plantation Homes makes the following computations and assumptions. A. Condominiums, Inc. has identifiable asse

> This information relates to Rice Co. 1. On April 5, purchased merchandise from Jax Company for $28,000 on account. 2. On April 7, purchased equipment on account for $30,000. 3. On April 8, returned $3,600 of April 5 merchandise to Jax Company. 4. On Apri

> Barto Company provides this information for the month ended October 31, 2017: sales on credit $300,000, cash sales $150,000, sales discounts $5,000, and sales returns and allowances $19,000. Prepare the sales section of the income statement based on this

> Use a tabular summary to record the following transactions for Jarvis Co. (Omit recording cost of goods sold.) (a) On July 1, Jarvis Co. sold merchandise on account to Stacey Inc. for $23,000. (b) On July 8, Stacey Inc. returned merchandise worth $2,400

> The following information is available for Bonkers Company for the month of January: expected cash receipts $59,000, expected cash disbursements $67,000, and cash balance on January 1, $12,000. Management wishes to maintain a minimum cash balance of $9,0

> In the month of November, Fiesta Company Inc. wrote checks in the amount of $9,750. In December, checks in the amount of $11,762 were written. In November, $8,800 of these checks were presented to the bank for payment, and $10,889 in December. What is th

> At July 31, Planter Company has this bank information: cash balance per bank $7,291, outstanding checks $762, deposits in transit $1,350, and a bank service charge $40. Determine the adjusted cash balance per bank at July 31.

> The following comparative information is available for Rose Company for 2017. Instructions (a) Determine net income under each approach. Assume a 30% tax rate. (b) Determine net cash provided by operating activities under each approach. Assume that all

> Jeters Company reports the following for the month of June. Instructions (a) Compute the cost of the ending inventory and the cost of goods sold under (1) FIFO, (2) LIFO, and (3) average-cost. (Round average unit cost to three decimal places.) (b) Whi

> On December 1, Premium Electronics has three DVD players left in stock. All are identical, all are priced to sell at $85. One of the three DVD players left in stock, with serial #1012, was purchased on June 1 at a cost of $52. Another, with serial #1045,

> Rusthe Inc. uses a periodic inventory system. Its records show the following for the month of May, in which 74 units were sold. Instructions Calculate the ending inventory at May 31 using the (a) FIFO, (b) LIFO, and (c) averagecost methods. (For ave

> Mather sells a snowboard, EZslide, that is popular with snowboard enthusiasts. Below is information relating to Mather’s purchases of EZslide snowboards during September. During the same month, 102 EZslide snowboards were sold. Mather u

> The following transactions are for Alonzo Company. 1. On December 3, Alonzo Company sold $500,000 of merchandise to Arte Co. on account. The cost of the merchandise sold was $330,000. 2. On December 8, Arte Co. returned $25,000 of merchandise purchased o

> Indicate how each business transaction affects the basic accounting equation. (a) Paid cash for janitorial services. (b) Purchased equipment for cash. (c) Issued common stock to investors in exchange for cash. (d) Paid an account payable in full.

> Rigley Company expects to have a cash balance of $46,000 on January 1, 2017. These are the relevant monthly budget data for the first two months of 2017. 1. Collections from customers: January $71,000 and February $146,000. 2. Payments to suppliers: Janu

> Lance, Art, and Wayne have joined together to open a law practice but are struggling to manage their cash flow. They haven’t yet built up sufficient clientele and revenues to support their legal practice’s ongoing costs. Initial costs, such as advertisin

> A new accountant at Wyne Inc. is trying to identify which of the following amounts should be reported as the current asset “Cash and cash equivalents” in the year-end balance sheet, as of April 30, 2017. 1. $60 of currency and coin in a locked box used f

> The Public Company Accounting Oversight Board (PCAOB) was created as a result of the Sarbanes-Oxley Act. It has oversight and enforcement responsibilities over accounting fi rms in the United States. Address: http://www.pcaobus.org Instructions Answer t

> Perth Inc.’s bank statement from Main Street Bank at August 31, 2017, gives the following information. A summary of the Cash account for August shows the following: balance, August 1, $18,700; receipts $74,000; disbursements $73,570;

> The cash records of Upton Company show the following. For July: 1. The June 30 bank reconciliation indicated that deposits in transit total $580. During July, the Cash account shows deposits of $16,900, but the bank statement indicates that only $15,600

> This information relates to the Cash account for Howard Company. Balance September 1—$16,500; Cash deposited—$64,000 Balance September 30—$17,600; Checks written—$62,800 The Septembe

> The following information pertains to Lance Company. 1. Cash balance per bank, July 31, $7,328. 2. July bank service charge not recorded by the depositor $38. 3. Cash balance per books, July 31, $7,364. 4. Deposits in transit, July 31, $2,700. 5. $2,016

> At April 30, the bank reconciliation of Back 40 Company shows three outstanding checks: No. 254 $650, No. 255 $700, and No. 257 $410. The May bank statement and the May cash payments record are given here. Instructions Using step 2 in the reconciliatio

> Rachel Sells is unable to reconcile the bank balance at January 31. Rachel’s reconciliation is shown as follows. Instructions (a) What is the proper adjusted cash balance per bank? (b) What is the proper adjusted cash balance per book

> At Martinez Company, checks are not prenumbered because both the purchasing agent and the treasurer are authorized to issue checks. Each signer has access to unissued checks kept in an unlocked file cabinet. The purchasing agent pays all bills pertaining

> What are the essential features of the allowance method of accounting for bad debts?

> The following control procedures are used in Bunny’s Boutique Shoppe for cash disbursements. 1. Each week, 100 company checks are left in an unmarked envelope on a shelf behind the cash register. 2. The store manager personally approves all payments befo

> The following control procedures are used in Keaton Company for over-the-counter cash receipts. 1. Each store manager is responsible for interviewing applicants for cashier jobs. They are hired if they seem honest and trustworthy. 2. All over-the-counter