Suppose Poseidon Publishing Company acquired all the common shares of Neptune Book Company for $80 million cash
Question:
Suppose Poseidon Publishing Company acquired all the common shares of Neptune Book Company for $80 million cash at the start of the year. Immediately before the business combination, each company had the following condensed balance sheet accounts (in millions):
1. Prepare a tabulation of the consolidated balance sheet accounts immediately after the acquisition. Use the balance-sheet-equation format.
2. Suppose Poseidon and Neptune have the following results for the year:
Prepare income statements for the year for Poseidon, Neptune, and the consolidated entity. Assume that neither Poseidon nor Neptune sells items to the other.
3. Present the effects of the operations for the year on Poseidon’s accounts and on Neptune’s accounts, using the balance sheet equation. Also tabulate the consolidated balance sheet accounts at the end of the year. Assume that liabilities are unchanged.
4. Suppose Neptune paid a cash dividend of $10 million. What accounts in requirement 3 would this affect and by how much?
Balance SheetBalance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
Step by Step Answer:
A common mistake is to think that the 80 million is additional money flowing into the Neptune Compan...View the full answer
Introduction to Management Accounting
ISBN: 978-0133058789
16th edition
Authors: Charles Horngren, Gary Sundem, Jeff Schatzberg, Dave Burgsta
