The Statement of Financial Position of MyCo Enterprises and YourCo Enterprises as at December 31, Year...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
The Statement of Financial Position of MyCo Enterprises and YourCo Enterprises as at December 31, Year 5, is as follows: MyCo Enterprises YourCo Enterprises Carrying Amount Carrying Amount Fair Value Current Assets $1,000,000 $25,000 $32,000 Accounts Receivables 225,000 50,000 60,000 Inventory 185,000 35,000 30,000 Property, Plant and 175,000 500,000 Equipment, net $1,585,000 610,000 Current Liabilities $110,000 45,000 47,000 Bonds Payable 250,000 65,000 Long-Term Debt 500,000 100,000 90,000 Common Shares 300,000 150,000 Retained Earnings 425,000 250,000 $1,585,000 $610,000 1 PART-I Effective January 1, Year-6, MyCo proposes to issue 70,000 shares (currently trading at $12 per share) for all the common shares of YourCo. In determining the acquisition price, the management of MyCo noted that YourCo has unrecorded customer service contracts and directed its accounting staff to reflect this when recording the acquisition. An independent appraiser placed a value of $80,000 on this unrecorded intangible asset. Direct costs associated with the acquisitions were as follows: Cost of Issuing Shares: Professional Fees: $15,000 $8,000 Required: a) Prepare a schedule to calculate Goodwill. b) Prepare the journal entries in the records of MyCo to record the share acquisition. c) Prepare MyCo's January 1, Year 6 consolidated balance sheet after the proposed transaction occurs. d) Assume MyCo is a private entity, uses ASPE and chooses to use the Cost Method to account for its investment in YourCo. Prepare the journal entries in the records of MyCo to record the share acquisition and related fees. e) Prepare the journal entries for the business combination under the Worksheet approach and using the Acquisition Method. (See solution for Problem 3-17-ONLY Journal entries required-No WORKING PAPER-Excel Sheet) PART-II Ignore Part -I. Assume that MyCo proposes to buy all the assets and assume all the liabilities for YourCo for $840,000 in cash. Cost of professional fees is $8,000. There are no unrecorded assets. Required: a) Prepare the journal entries in the books of MyCo to record the purchase of YourCo's net assets b) Prepare the statement of financial position of MyCo on January 1, Year-6, after recording the purchase of YourCo's net assets. c) Prepare the statement of financial position of YourCo immediately after sale. The Statement of Financial Position of MyCo Enterprises and YourCo Enterprises as at December 31, Year 5, is as follows: MyCo Enterprises YourCo Enterprises Carrying Amount Carrying Amount Fair Value Current Assets $1,000,000 $25,000 $32,000 Accounts Receivables 225,000 50,000 60,000 Inventory 185,000 35,000 30,000 Property, Plant and 175,000 500,000 Equipment, net $1,585,000 610,000 Current Liabilities $110,000 45,000 47,000 Bonds Payable 250,000 65,000 Long-Term Debt 500,000 100,000 90,000 Common Shares 300,000 150,000 Retained Earnings 425,000 250,000 $1,585,000 $610,000 1 PART-I Effective January 1, Year-6, MyCo proposes to issue 70,000 shares (currently trading at $12 per share) for all the common shares of YourCo. In determining the acquisition price, the management of MyCo noted that YourCo has unrecorded customer service contracts and directed its accounting staff to reflect this when recording the acquisition. An independent appraiser placed a value of $80,000 on this unrecorded intangible asset. Direct costs associated with the acquisitions were as follows: Cost of Issuing Shares: Professional Fees: $15,000 $8,000 Required: a) Prepare a schedule to calculate Goodwill. b) Prepare the journal entries in the records of MyCo to record the share acquisition. c) Prepare MyCo's January 1, Year 6 consolidated balance sheet after the proposed transaction occurs. d) Assume MyCo is a private entity, uses ASPE and chooses to use the Cost Method to account for its investment in YourCo. Prepare the journal entries in the records of MyCo to record the share acquisition and related fees. e) Prepare the journal entries for the business combination under the Worksheet approach and using the Acquisition Method. (See solution for Problem 3-17-ONLY Journal entries required-No WORKING PAPER-Excel Sheet) PART-II Ignore Part -I. Assume that MyCo proposes to buy all the assets and assume all the liabilities for YourCo for $840,000 in cash. Cost of professional fees is $8,000. There are no unrecorded assets. Required: a) Prepare the journal entries in the books of MyCo to record the purchase of YourCo's net assets b) Prepare the statement of financial position of MyCo on January 1, Year-6, after recording the purchase of YourCo's net assets. c) Prepare the statement of financial position of YourCo immediately after sale.
Expert Answer:
Related Book For
Modern Advanced Accounting In Canada
ISBN: 9781259066481
7th Edition
Authors: Hilton Murray, Herauf Darrell
Posted Date:
Students also viewed these accounting questions
-
I need help on this read from bottom to top. Image transcription text 7"} The second ?nancial statement to prepare is the statement of retained earnings. To determine the ending balance of...
-
The balance sheet of Drake Enterprises as at December 31, Year 5, is as follows: Assets Cash .............. $ 99,000 Accounts receivable ....... 143,000 Inventory ............ 191,400 Property,...
-
Use the method of maximum likelihood to estimate in the pdf f Y (y; ) = /2y e y , y 0 Evaluate e for the following random sample of size 4: Y 1 = 6.2, Y 2 = 7.0, Y 3 = 2.5, and Y 4 = 4.2.
-
Three sisters formed a partnership to sell skin care products made from organic ingredients. They have been operating for one year. The bank balance at the end of the year is $41 000. A summary of...
-
What is the total cost for the customer service category of the value chain?
-
The following expenses budget has been prepared for Zuri Health Ltd for the year ending 30 June 2025. Required Prepare a schedule of estimated cash payments for expenses for Zuri Health Ltd for the...
-
Cheyl Stake is concerned that too many forms are being filled out incorrectly. She feels that about 8 percent of all the forms have an error. a. How large a sample size should Ms. Stake use to be 99...
-
Describe the situation from either your professional experience or your research in which unethical or fraudulent behavior occurred. If you are describing an example from experience, please do not...
-
Placements Tate Inc. purchased on October 1, 2013 a used building for $1,600,000. The building was immediately leased for the following amounts of rents (rents for Oct1-Dec.31/13 excluding sales...
-
Requirement 1. Journalize the transactions. January 31: Based on last year's property tax assessment, estimated that the property taxes for the year would be $ 120 comma 000 (4 percent of last year's...
-
I am budgeting funds for four dierent projects (to run in sequence); I have $10,000 total. I want to allocate my funds such that total expenditures have specications of $9,000 plus or minus $1,000,...
-
Among the listed education credits, which one is both available for Mark and Judi Wilder and provides the greatest tax benefit? American Opportunity Tax Credit (AOTC) for $1,500 as a nonrefundable...
-
Cost of Credit Card Debt Sue and Jerry were living paycheck to paycheck. They never made saving for a rainy-day a priority. However, they decided to take a much-needed vacation that cost $2,000. They...
-
You just received an inheritance of $30,000. You need $48,000 to buy a car. If you can earn a stable 5% annual rate of return on your $30,000, how long will it take you to get to your goal? Question...
-
Identify a significant or common situation in your workplace (or a workplace with which you are familiar) that involves intergroup conflict. Then perform the following: Identify the sources or...
-
Reichenbach Co., organized in 2018, has set up a single account for all intangible assets. The following summary discloses the debit entries that have been recorded during 2018 and 2019. Instructions...
-
(a) Express the magnitude of the electric field inside the strip in Figure 27.43 in terms of the width \(w\) of the strip and the potential difference \(V_{\mathrm{RL}}\). (b) Given the magnitude...
-
A compass sits on a table with its needle pointing to Earth's North Pole. A bar magnet with its long axis oriented along an east-west line is brought toward the compass from the east. If the needle...
-
Explain why the \(1 / r\) dependence expressed in Eq. 27.38 is consistent with the symmetry of the wire causing the magnetic field. B = = 2kI rco 2k I (27.38) &
Study smarter with the SolutionInn App