1- At its inception, Ute Company purchased land for $900,000 and a building for $2,000,000. After exactly 5 years, it transferred these assets and cash of $300,000 to a newly created subsidiary, Cougar Company, in exchange for 50,000 shares of Cougar's $15 par value stock with a Fair Value of $82 per stock. Ute uses straight-line depreciation. Useful life for the building is 20 years, with zero residual value. An appraisal revealed that the building has a fair value of $2,700,000 and the Land had a fair value of $1,100,000.Based on the preceding information, Ute Company will make what journal entry to reflect the transfer of assets from its books? (3pts)

Based on the preceding information, Cougar Company will report on its own books, how much for Additional Paid in Capital? (2pts)

2- Peanut Butter Corporation and Jelly Company merged as of January 1, 20X9. To effect the merger, Peanut Butter paid commission fees of $55,000, legal fees of $120,000 related to contract negotiations, stock registration fees of $30,000, asset valuation fees of $50,000, travel cost $25K, audit fees related to stock issuance for stock issuance of $75K and legal fees for due diligence of $130K. Based on the preceding information, under the acquisition method, what amount relating to the business combination would be expensed on the income statement? (2pts)

3- Salt Corporation reported the net book value of its total assets at $800,000 when Pepper Corporation acquired 100 percent ownership of its assets and liabilities. The fair value of Salt’s net assets was determined to be $880K and the fair value of the total assets equal $990K.Based on the preceding information, what amount of goodwill will be reported in the consolidated financial statements presented immediately following the combination if Pepper paid $1,300,000 for all the net assets? (2pts)

How would your answer change if Pepper paid $900K for 100% of the net assets?

Answer rating: 100% (QA)

Purchased Land 900 680 Building 2 2000000 900000 5years trauth Assets and Cas... View the full answer