Tyrion Incorporated which is considering acquiring Cersei Company uses the following data for an analysis: Average...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Tyrion Incorporated which is considering acquiring Cersei Company uses the following data for an analysis: Average annual sales for the past 5 years Expected annual increase in wages not to be recovered by increase revenues Increase in annual depreciation on the current fair value of assets Average annual cost of goods sold for the past 5 years Annual amortization of tangible assets with finite lives not previously recorded Average annual operating expenses for the past 5 years P6,280,000 400,000 120,000 2,660,000 Revaluation of weighted average inventory to fair value Increase in allowance for bad debts Revaluation of PPE to fair value Fair value of patent Revaluation of bonds payable due to decline in interest Unfunded projected benefits obligation of the pension plan 100,000 1,800,000 Assume that the appropriate rate of return is 10%. The book value of Cersei's net identifiable net assets is P5,700,000, which the revaluation were summarize as follows: P900,000 100,000 1,200,000 1,500,000 600,000 1,400,000 Any excess annual earnings are expected to last for the next ten years. Determine the following as a result of your audit: 1. How much is the total value of the company acquired? 2. How much should Tyrion recognized as goodwill upon acquisition? a. Excess annual earings is capitalized at 12% b. Excess annual earnings are expected to occur at the end of each period for 10 years. (PV method) c. Excess annual earings are expected to last for ten years, no time value. d. Average annual earnings are capitalized at 8%. Tyrion Incorporated which is considering acquiring Cersei Company uses the following data for an analysis: Average annual sales for the past 5 years Expected annual increase in wages not to be recovered by increase revenues Increase in annual depreciation on the current fair value of assets Average annual cost of goods sold for the past 5 years Annual amortization of tangible assets with finite lives not previously recorded Average annual operating expenses for the past 5 years P6,280,000 400,000 120,000 2,660,000 Revaluation of weighted average inventory to fair value Increase in allowance for bad debts Revaluation of PPE to fair value Fair value of patent Revaluation of bonds payable due to decline in interest Unfunded projected benefits obligation of the pension plan 100,000 1,800,000 Assume that the appropriate rate of return is 10%. The book value of Cersei's net identifiable net assets is P5,700,000, which the revaluation were summarize as follows: P900,000 100,000 1,200,000 1,500,000 600,000 1,400,000 Any excess annual earnings are expected to last for the next ten years. Determine the following as a result of your audit: 1. How much is the total value of the company acquired? 2. How much should Tyrion recognized as goodwill upon acquisition? a. Excess annual earings is capitalized at 12% b. Excess annual earnings are expected to occur at the end of each period for 10 years. (PV method) c. Excess annual earings are expected to last for ten years, no time value. d. Average annual earnings are capitalized at 8%.
Expert Answer:
Answer rating: 100% (QA)
The image contains text pertaining to an accounting scenario in which Tyrion Incorporated is considering acquiring Cersei Company and is analyzing various financial data and expected changes in value ... View the full answer
Related Book For
Horngrens Accounting
ISBN: 978-0134674681
12th edition
Authors: Tracie L. Miller nobles, Brenda L. Mattison, Ella Mae Matsumura
Posted Date:
Students also viewed these accounting questions
-
A company wants to offer stock for sale to the public for the first time. Which other institution is involved in this type of transaction?
-
Read the case study "Southwest Airlines," found in Part 2 of your textbook. Review the "Guide to Case Analysis" found on pp. CA1 - CA11 of your textbook. (This guide follows the last case in the...
-
The Jacksonville Shirt Company makes two types of T-shirts: basic and custom. Basic shirts are plain shirts without any screen printing on them. Custom shirts are created using the basic shirts and...
-
A square duct, 30 cm by 30 cm, is maintained at a constant temperature of 30oC and an airstream of 50oC and 1 atm is forced across it with a velocity of 6 m/s. Calculate the heat gained by the duct....
-
If electrical components are to be mounted to both sides of a circuit board, what soldering process(es) would you use? Explain.
-
The PENTEL Corporation manufactures three different types of computer chips. Each type of chip requires different amounts of processing time in three different departments as summarized in the...
-
You have been asked to analyze the value of equity in a company that has the following features: The earnings before interest and taxes is \($25\) million, and the corporate tax rate is 40%. The...
-
The transactions relating to the formation of Blue Co. Stores, Inc., and its first month of operations follow. Prepare an answer sheet with the columns shown. Record each transaction in the...
-
Exercise 1: Problem-solving case Henry Company is a marketer of branded foods to retail and foodservice channels. The exhibit below presents Henry's income statements for Year 10, Year 11, and Year...
-
The trial balance of Pacilio Security Services Inc. as of January 1, 2017, had the following normal balances: Cash ................. 78 , 972 P e t t y C a s h . . . . . . . . . . . . . . . . 100 A c...
-
Neil Jones is the trustee of an Australian resident trust estate created by a Deed. There are two beneficiaries: Pauline aged 14 years and Bob aged 25 years. They are both residents of Australia. Net...
-
4.26 A particle of mass m and initial velocity, collides elastically with a particle of unknown mass A coming from the opposite direction as shown at left below. After the collision m has velocity...
-
Identify and briefly describe the various types of rating errors that can be made when assessing employee performance.
-
Meena is a duty solicitor at the Magistrates Court. On arrival at work this morning, she was sent to meet Lola. Lola had been charged with punching her boyfriend (Actual Bodily Harm) and wanted to...
-
Define the concepts of implementation, transformation, incorporation, reception, unification, adaptation, approximation, harmonization, legitimacy, reference, parallel lawmaking. Provide examples. 2....
-
What is the force responsible for the centripetal acceleration in this case? weight normal O gravity
-
Angkatan Tentera Malaysia (ATM) is the armed forces of Malaysia, consists of three branches, namely the Malaysian Army, Royal Malaysian Navy and the Royal Malaysian Air Force. ATM has more than...
-
7. Baladna wants to analyze process that includes delivery by suppliers, production inside the company, transportation to to its customers and information systems. Then it also wants to find out...
-
Annette Pachelo recently opened her own law office on March 1, which she operates as a corporation. The name of the new entity is Annette Pachelo, Attorney. Pachelo experienced the following events...
-
Feb. 1 Sold merchandise inventory on account, terms n/30, to Cole Co., $1,050. Cost of goods, $860. Invoice no. 401. 6 Sold merchandise inventory for cash, $950 (cost, $750). 12 Collected interest...
-
Snappy Plants operates a commercial plant nursery where it propagates plants for garden centers throughout the region. Snappy Plants has $5,100,000 in assets. Its yearly fixed costs are $650,000, and...
-
The PCAOB auditing and related professional practice standards include the following, except: (a) Auditing standards (b) Attestation standards (c) Ethics and independence standards and rules (d)...
-
The following are types of assurance services with the exception of: (a) Training engagement (b) Due diligence engagement (c) Compliance engagement (d) Financial engagement
-
The PCAOB main responsibilities include the following, except: (a) Registration of accounting firms (including non-US firms) that audit public companies (including non-US issuers) trading in US...
Study smarter with the SolutionInn App