Questions and Answers of Fundamentals Of Advanced Accounting

On January 1, 2023, Porsche Company acquired 100% of Saab Company’s stock for $450,000 cash. The fair value of Saab’s identifiable net assets was $375,000 on this date. Porsche Company decided to
A 90% interest in Saxton Corporation was purchased by Palm Incorporated on January 2, 2024. The capital stock balance of Saxton Corporation was $3,000,000 on this date, and the balance in retained
On January 1, 2025, Push Company purchased an 80% interest in the capital stock of Way- Down Company for $820,000. At that time, Way Down Company had capital stock of $500,000 and retained earnings
Centennial Exchange of St. Louis, Missouri, imports and exports grains. The company has a September 30 fiscal year- end. The periodic inventory system and the weighted- average cost flow method are
Select the best answer for each of the following.1. A forward contract is a hedge of an identifiable foreign currency commitment if(a) The forward contract is designated as, and is effective as, a
Apple Company was incorporated in Delaware in 2017. On November 2, 2024, the controller of the company entered into a forward contract to sell 50,000 British pounds for $1.5920 on March 1, 2025. The
Select the best answer for each of the following.1. A sale of goods by a U.S. company was denominated in a foreign currency. The sale resulted in a receivable that was fixed in terms of the amount of
Citron Company is a U.S.- based citrus grower. On October 1, 2024, the company entered into a contract to ship 25,000 boxes of grapefruit on January 28 to Japan. Payment of 50,100,000 yen is to be
Agentel Corporation is a U.S.- based importing- exporting company. The company entered into the following transactions during the month of November.All the transactions were unsettled at December 31,
During her first quarter review of the financial statements, Debra Bell, the CFO of HAL Computer Corporation, was distressed to notice the company’s transaction loss had been steadily increasing
ASI recently completed the development and installation of an accounting information system for a company located in Rio De Janeiro, Brazil. The company considered that all revenue realization
A U.S. company estimated that, in the first two months of 2026, its export sales to a Swiss company would generate 400,000 francs. On December 1, 2025, in an effort to protect against the weakening
Vanderbilt Clothing Company placed a clothing order with a company located in Taiwan. The order was placed on November 1, 2024, for delivery on May 1, 2025. Vanderbilt agreed to pay for the goods on
Tom and Julie formed a management consulting partnership on January 1, 2024. The fair value of the net assets invested by each partner follows:During the year, Tom withdrew $15,000 and Julie withdrew
Dave, Brian, and Paul are partners in a retail appliance store. The partnership was formed January 1, 2024, with each partner investing $45,000. They agreed that profits and losses are to be shared
The partnership of Cain, Gallo, and Hamm engaged you to adjust its accounting records and convert them uniformly to the accrual basis in anticipation of admitting Kerns as a new partner. Some
The December 31, 2024, balance sheet of the Datamation Partnership is shown below.Dave, Allen, and Matt share profits and losses in the ratio of 50:30:20. The inventory on December 31 has a fair
Hill, Jones, and Vose have been partners throughout 2024. Their average balances for the year and their balances at the end of the year before closing the nominal accounts are as follows:The income
Neal, Palmer, and Ruppe are partners in a real estate company. Their respective capital balances and profit sharing ratios are as follows:Neal wishes to withdraw from the partnership on January 1,
Brian Snow and Wendy Waite formed a partnership on July 1, 2018 Brian invested $20,000 cash, inventory valued at $15,000, and equipment valued at $67,000. Wendy invested $50,000 cash and land valued
The Discount Partnership is being liquidated. The current balance sheet is shown here.Dawson, Feeney, and Hardin share profits and losses in a 30:40:30 ratio.Required:A. Prepare a schedule of
Mark Malone, Pete Patton, and Sally Spencer formed a partnership on January 1, 2024. Their original capital investments (all cash) were $140,000, $160,000, and $100,000, respectively. During the
Following is the preclosing trial balance for the General Fund of the City of Doyle.Required:Prepare in general journal form the closing entries for the General Fund of Doyle City. Cash Certificates
On January 1, 2025, the City of Cape May authorized and issued $200,000 of 5%, three- year term bonds. Interest is payable annually on December 31. A debt service fund is established to accumulate
The City of Dayville has undertaken a sidewalk construction project. The project is being financed by the proceeds from the issue on July 1, 2025, of $500,000 of 7% special assessment debt. One
The administrators of the City of Lyons have obtained approval from the City Council to centralize the computer facility as of January 1, 2025. An internal service fund is created to account for the
On January 1, 2025, Allentown issued $800,000 of 9% serial bonds at par. Semiannual interest is payable on January 1 and July 1 and principal of $80,000 matures each January 1 starting in 2026. The
The following activities and transactions are typical of those that may affect the various funds used by a typical municipal government.Required:Prepare journal entries to record each transaction and
Punca Company purchased 85% of the common stock of Surrano Company on July 1, 2022, for a cash payment of $590,000. December 31, 2022, trial balances for Punca and Surrano were:Surrano Company
Pillow Company purchased 90% of the common stock of Satin Company on May 1, 2021, for a cash payment of $474,000. December 31, trial balances for Pillow and Satin were:Satin Company declared a
Part 1: When a company acquires another company, often less than 100% of the shares are acquired. For an acquisition to be considered a business acquisition, control must be obtained. Net income of
Condensed balance sheets for Phillips Company and Solina Company on January 1, 2023, are as follows:On January 1, 2023, the stockholders of Phillips and Solina agreed to a consolidation. Because FASB
The balance sheets of Petrello Company and Sanchez Company as of January 1, 2024, are presented below. On that date, after an extended period of negotiation, the two companies agreed to merge. To
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?
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
On November 19, 2009, eBay sold all the capital shares of Skype to Springboard Group. eBay received cash proceeds of approximately $1.9 billion, a subordinated note issued by a subsidiary of the
Pretzel Company acquired the assets (except for cash) and assumed the liabilities of Salt Company on January 2, 2025. As compensation, Pretzel Company gave 30,000 shares of its common stock, 15,000
Pham Company acquired the assets (except for cash) and assumed the liabilities of Senn Company on January 1, 2024, paying $720,000 cash. Senn Company’s December 31, 2023, balance sheet, reflecting
Balance sheets for Salt Company and Pepper Company on December 31, 2023, follow:Pepper Company tentatively plans to issue 30,000 shares of its $20 par value stock, which has a current market value of
On January 1, 2024, 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
Consider the following information from Alliance Data Systems Corporation 2009 10K. On October 30, 2009, the Company assumed the operations of the Charming Shoppes’ credit card program, including
Assume the same information as in Exercise 2-5 except that instead of paying a cash earnout, Pritano Company agreed to issue 10,000 additional shares of its $10 par value common stock to the
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 2023 for the two companies are as
Plantation Homes Company is considering the acquisition of Condominiums, Inc. early in 2025. To assess the amount, it might be willing to pay, Plantation Homes makes the following computations and
How many years of comparative financial statements are required under current GAAP?
P Company acquired the assets and assumed the liabilities of S Company on January 1, 2023, for $510,000 when S Company’s balance sheet was as follows:Fair values of S Company’s assets and
On January 1, 2022, Parker Company purchased 95% of the outstanding common stock of Sid Company for $160,000. At that time, Sid’s stockholders’ equity consisted of common stock, $120,000; other
On January 1, 2027, Plutonium Corporation acquired 80% of the outstanding stock of Sulfurst Inc. for $268,000 cash. The following balance sheet shows Sulfurst Inc.’s book values immediately prior
Poco Company purchased 80% of Solo Company’s common stock on January 1, 2022, for $250,000. On December 31, 2022, the companies prepared the following trial balances:Required:Prepare a consolidated
On January 1, 2021, Perelli Company purchased 90,000 of the 100,000 outstanding shares of common stock of Singer Company as a long- term investment. The purchase price of $4,972,000 was paid in cash.
On January 1, 2021, Plank Company purchased 80% of the outstanding capital stock of Scoba Company for $53,000. At that time, Scoba’s stockholders’ equity consisted of capital stock, $55,000;
Price Company purchased 90% of the outstanding common stock of Score Company on January 1, 2021, for $450,000. At that time, Score Company had stockholders’ equity consisting of common stock,
The following accounts appeared in the separate financial statements at the end of 2024 for Pressing Inc. and its wholly- owned subsidiary, Stressing Inc. Stressing was acquired in 2019.Required:1.
On February 1, 2024, 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,
On January 1, 2025, 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
On July 31, 2024, 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
The two following separate cases show the financial position of a parent company and its subsidiary company on November 30, 2024, just after the parent had purchased 90% of the subsidiary’s
On January 1, 2023, Peach Company issued 1,500 of its $20 par value common shares with a fair value of $60 per share in exchange for the 2,000 outstanding common shares of Swartz Company in a
In the following table, General Electric’s Balance Sheet from its 2010 annual report is shown. There are six columns of numbers. In the first two columns, GE’s consolidated balance sheets for
Assume the same information from Exercise 3-8. In addition, Peep Inc. incurred the following direct costs:Before the acquisition consummation date, $90,000 of the direct costs was charged to a
On January 1, 2024, 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
Balance sheets for Prego Company and Sprague Company as of December 31, 2023, follow:The fair values of Sprague Company’s assets and liabilities are equal to their book values.Required:Prepare a
On December 31, 2023, Price Company purchased a controlling interest in Shipley Company. The balance sheet of Price Company and the consolidated balance sheet on December 3, 2023, were as follows:On
Balance sheets for P Company and S Company on August 1, 2024, are as follows:Required:Prepare a workpaper for a consolidated balance sheet for P Company and its subsidiary on August 1, 2024, taking
Determining Balance Sheet Prior to Consolidation LO 8 On January 1, 2024, Pat Company purchased 90% of the outstanding common stock of Solo Company for $236,000 cash. The balance sheet for Pat
On January 2, 2024, 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
Pool Company purchased 90% of the outstanding common stock of Spruce Company on December 31, 2024, for cash. At that time the balance sheet of Spruce Company was as follows:Required:Prepare the
On January 2, 2024, Prunce Company acquired 90% of the outstanding common stock of Sun Company for $192,000 cash. Just before the acquisition, the balance sheets of the two companies were as
Continue the situation in Exercise 4- 6 and assume that during 2025 Sales Company earned $190,000 and declared and paid a $50,000 dividend.Required:A. Prepare the investment-related entries on Pert
On January 1, 2023, Porsche Company acquired the net assets of Saab Company for $450,000 cash. The fair value of Saab’s identifiable net assets was $375,000 on this date. Porsche Company decided to
At the date of an 80% acquisition, a subsidiary had common stock of $100,000 and retained earnings of $16,250. Seven years later, at December 31, 2025, the subsidiary’s retained earnings had
On January 1, 2024, Polo Company purchased 100% of the common stock of Save Company by issuing 40,000 shares of its (Polo’s) $10 par value common stock with a market price of $17.50 per share. Polo
On January 1, 2024, 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,
The following balance sheets were reported on January 1, 2024, for Peach Company and Stream Company:Required:Appraisals reveal that the inventory has a fair value of $120,000, and the equipment has a
Consider the following: Accounting firm KPMG created tax shelters called BLIPS, FLIP, OPIS, and SOS that were based largely in the Cayman Islands and allowed wealthy clients (there were 186) to
You are working on the valuation of accounts receivable, and bad debt reserves for the current year’s annual report. The CFO stops by and asks you to reduce the reserve by enough to increase the
Effective December 31, 2023, Zintel Corporation proposes to issue additional shares of its common stock in exchange for all the assets and liabilities of Smith Corporation and Platz Corporation,
Price Company purchased 90% of the outstanding common stock of Score Company on January 1, 2021, for $450,000. At that time, Score Company had stockholders’ equity consisting of common stock,
December 31, 2024, trial balances for Pledge Company and its subsidiary Stom Company follow:Pledge Company purchased 72,000 shares of Stom Company’s common stock on January 1, 2021, for $300,000.
On May 1, 2025, Peters Company purchased 80% of the common stock of Smith Company for $50,000. Additional data concerning these two companies for the years 2025 and 2026 are:Any difference between
On October 1, 2025, Para Company purchased 90% of the outstanding common stock of Star Company for $210,000. Additional data concerning Star Company for 2025 follows:Any difference between book value
Percy Company purchased 80% of the outstanding voting shares of Song Company at the beginning of 2024 for $387,000. At the time of purchase, Song Company’s total stockholders’ equity amounted to
Parry Corporation acquired a 100% interest in Sent Company on January 1, 2021, paying $140,000. Financial statement data for the two companies for the year ended December 31, 2021 follow:Required:A.
Perkins Company acquired 100% of Schultz Company on January 1, 2022, for $161,500. On December 31, 2022, the companies prepared the following trial balances:Required:A. What method is being used by
On January 1, 2022, Perez Company purchased 90% of the capital stock of Sanchez Company for $85,000. Sanchez Company had capital stock of $70,000 and retained earnings of $12,000 at that time. On
Place Company purchased 92% of the common stock of Shaw, Inc. on January 1, 2022, for $400,000. Trial balances at the end of 2022 for the companies were:Inventory balances on December 31, 2022, were
On January 1, 2024, 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
Poco Company purchased 85% of the outstanding common stock of Serena Company on December 31, 2024, for $310,000 cash. On that date, Serena Company’s stockholders’ equity consisted of the
At the beginning of 2019, 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:During
Park Company purchased 90% of the stock of Salt Company on January 1, 2024, for $465,000, an amount equal to $15,000 in excess of the book value of equity acquired. This excess payment relates to an
Assume that the U.S. dollar is the subsidiary’s functional currency. What balances does a consolidated balance sheet report as of December 31, 2020?a. Marketable equity securities = $16,000 and
Refer to the information in problem 26. Prepare a statement of cash flows in pounds for Sullivan’s Island Company’s foreign subsidiary and then translate these amounts into U.S.
Which of the following is not a reason for the popularity of partnerships as a legal form for businesses?a. Partnerships may be formed merely by an oral agreement.b. Partnerships can more easily
Diekmann Company, a U.S.-based company, acquired a 100 percent interest in Rakona A.S. in the Czech Republic on January 1, 2019,when the exchange rate for the Czech koruna (Kčs) was $0.05.
On June1, Parker-Mae Corporation (a U.S.-based company) received an order to sell goods to a foreign customer at a price of 100,000 francs. Parker-Mae will ship the goods and receive payment in three
James Corporation owns 80 percent of Carl Corporation’s common stock. During October, Carl sold merchandise to James for $250,000. At December 31, 40 percent of this merchandise remains in
Jordan, Inc., holds 75 percent of the outstanding stock of Paxson Corporation. Paxson currently owes Jordan $400,000 for inventory acquired over the past few months. In preparing consolidated
SafeData Corporation has then following account balances and respective fair values on June 30:Privacy First, Inc., obtained all of the outstanding shares of SafeData on June 30 by issuing 20.000
What is the appropriate accounting treatment for the value assigned to in-process research and development acquired in a business combination? a. Expense upon acquisition. b. Capitalize as
Net cash flows from operating activities werea. $12,000b. $20,000c. $24,000d. $25,000Comparative consolidated balance sheet data for Iverson, Inc., and its 80 percent–owned subsidiary Oakley Co.

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