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    Advanced Accounting: FVINA, Allocation Schedule, Purchase Prices...

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    ** Please see the attached file for the complete problem description **

    Hill buys Loring on 7/1 for $400,000 by issuing 10,000 of $5 par, $40 fair value shares to Loring's existing shareholders.
    (please see the attached file)

    Required:

    a. Calculate FVINA for this example.

    b. Optional: Prepare an allocation schedule.

    c. Definition of Goodwill = Purchase Price less ____________ .

    d. Calculate Goodwill for this example.

    e. Prepare Hill's journal entry to acquire Loring assuming acquisition of stock with no dissolution (not the elimination entries).

    f. What will be the balances in Hill's Owners' Equity accounts after the acquisition?

    g. Prepare the elimination entries.

    © BrainMass Inc. brainmass.com December 24, 2021, 10:20 pm ad1c9bdddf
    https://brainmass.com/business/accounting/advanced-accounting-fvina-allocation-schedule-purchase-prices-464959

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    SOLUTION This solution is FREE courtesy of BrainMass!

    ** Please see the attachment for the complete solution **

    In thousands Hill Pre- Loring Loring
    Acquisition BV FV
    Cash and receivables 140 60 60
    Inventory 190 145 175
    Patented Technology 230 180 200
    Land 400 200 225
    Buildings 100 75 75
    Total 1,060 660 735

    Liabilities (540) (360) (350)
    Common Stock (300) (70)
    APIC (10) (30)
    Retained Earnings, 7/1 (210) (200)
    Total (1,060) (660) (350)

    Answer a

    Cash and receivables 60
    Inventory 175
    Patented Technology 200
    Land 225
    Buildings 75
    FV of Assets 735
    Less: FV of Liabilities (350)
    FVNIA 385

    Answer b
    Purchase Price $400
    BVNA
    Total book value of assets 660
    Book value of liabilities (360)
    BVNA 300
    Excess to allocate $100
    Allocation
    Inventory 30
    Patented Technology 20
    Land 25
    Liabilities 10
    Goodwill 15
    Total allocation 100

    Answer c
    Definition of Goodwill = Purchase Price less FVNIA

    Answer d
    Purchase price paid $400
    FVNIA 385
    Goodwill $15

    Answer e

    Cash and receivables.....................Dr 60
    Inventory.....................................Dr 175
    Patented Technology....................Dr 200
    Land..........................................Dr 225
    Buildings....................................Dr 75
    Goodwill.....................................Dr $15
    Liabilities.........................................................Cr 350
    Common Stock................................................Cr 50
    Additional Paid in Capital (APIC).........................Cr 350

    Answer f
    Before Acquisition Acquisition Change Post Acquisition
    Common Stock (300) (50) (350)
    APIC (10) (350) (360)
    Retained Earnings, 7/1 (210) (210)
    Total Equity (520) (400) (920)

    Answer g

    Liabilities...................................Dr 350
    Common Stock...........................Dr 50
    Additional Paid in Capital (APIC).....Dr 350
    Cash and receivables.........................................Cr 60
    Inventory.........................................................Cr 175
    Patented Technology..........................................Cr 200
    Land..............................................................Cr 225
    Buildings........................................................Cr 75
    Goodwill........................................................Cr 15

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    © BrainMass Inc. brainmass.com December 24, 2021, 10:20 pm ad1c9bdddf>
    https://brainmass.com/business/accounting/advanced-accounting-fvina-allocation-schedule-purchase-prices-464959

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