Scribd Logo
Upload

Welcome to Scribd!

  • 55 views

    Soal Akuntansi Lanjutan

    Uploaded by

    Dion Bonaventura Manalu
    Pepper Company acquired all of SGM Corporation's assets and liabilities in exchange for 18,000 shares of its common stock. Pepper recorded the acquisition by debiting various asset and expense accounts for the purchase price and fair values of the assets acquired, crediting paid-in capital for the stock issued, and crediting liabilities assumed. The combined balance sheet of Kenko Inc. and Carex Company after their merger shows total assets and stockholders' equity of the two companies combined, with Kenko acquiring Carex's net assets by issuing 700 shares of its common stock.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    Soal Akuntansi Lanjutan

    Uploaded by

    Dion Bonaventura Manalu
    55 views2 pages
    Pepper Company acquired all of SGM Corporation's assets and liabilities in exchange for 18,000 shares of its common stock. Pepper recorded the acquisition by debiting various asset and expense accounts for the purchase price and fair values of the assets acquired, crediting paid-in capital for the stock issued, and crediting liabilities assumed. The combined balance sheet of Kenko Inc. and Carex Company after their merger shows total assets and stockholders' equity of the two companies combined, with Kenko acquiring Carex's net assets by issuing 700 shares of its common stock.

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Pepper Company acquired all of SGM Corporation's assets and liabilities in exchange for 18,000 shares of its common stock. Pepper recorded the acquisition by debiting various asset and expense accounts for the purchase price and fair values of the assets acquired, crediting paid-in capital for the stock issued, and crediting liabilities assumed. The combined balance sheet of Kenko Inc. and Carex Company after their merger shows total assets and stockholders' equity of the two companies combined, with Kenko acquiring Carex's net assets by issuing 700 shares of its common stock.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    55 views2 pages

    Soal Akuntansi Lanjutan

    Uploaded by

    Dion Bonaventura Manalu
    Pepper Company acquired all of SGM Corporation's assets and liabilities in exchange for 18,000 shares of its common stock. Pepper recorded the acquisition by debiting various asset and expense accounts for the purchase price and fair values of the assets acquired, crediting paid-in capital for the stock issued, and crediting liabilities assumed. The combined balance sheet of Kenko Inc. and Carex Company after their merger shows total assets and stockholders' equity of the two companies combined, with Kenko acquiring Carex's net assets by issuing 700 shares of its common stock.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 2

    Advance Financial Accounting 1

    Week 1
    Intercorporate Acquisition and Investment in Other Entities and Concept of Control
    Teaching Assistant Team

    PROBLEM 1: Journal Entries to Record a Business Combination


    On January 1, 2021, Pepper Company acquired all SGM Corporation’s assets and liabilities by issuing
    18,000 shares of its $5 par value common stock. At that date, Pepper shares were selling at $23 per
    shares. Historical cost and fair value balance sheet data for SGM at the time of acquisition were as
    follows (in $):

    Balance Sheet Item Historical Cost Fair Value

    Cash and Receivables 30,000 40,000

    Inventory 80,000 100,000

    Building and Equipment 700,000 465,000

    Less: Accumulated Depreciation (270,000)

    Total Assets 540,000 605,000

    Account Payables 50,000 50,000

    Notes Payable 73,000 73,000

    Common Stock ($10 par value) 170,000

    Retained Earnings 247,000

    Total Liabilities and Equities 540,000

    Pepper paid legal fees for the transfer of assets and liabilities of $30,000. Pepper also paid audit fees
    of $25,000 and listing application fees of $10,000, both related to the issuance of new shares.

    Required: Prepare the journal entries made by Pepper to record the business combination.

    PROBLEM 2: Combined Balance Sheet


    Kenko Inc. and Carex Company agreed to merge on January 1, 202X. On the date of the merger
    agreement, the companies reported the following data (in $):
    Kenko Carex Company
    Balance Sheet Item
    Book Value Fair Value Book Value Fair Value

    Cash and Receivables 90,000 90,000 20,000 20,000

    Inventory 100,000 150,000 30,000 42,000

    Land 100,000 140,000 10,000 15,000


    Plant & Equipment 400,000 300,000 200,000 140,000

    Less: Acc. Depreciation (150,000) (80,000)

    Total Assets 540,000 680,000 180,000 217,000

    Current Liabilities 80,000 80,000 20,000 20,000

    Capital Stock 200,000 20,000

    Capital in Excess of Par 20,000 5,000


    Value

    Retained Earnings 240,000 135,000

    Total Liabilities & 540,000 180,000


    Equities

    Kenko has 10,000 shares of its $20 par value shares outstanding on Januari 1, 202X and Carex has
    4,000 shares of %5 par value stock outstanding. The market value of the shares are $350 and $50,
    respectively.
    Required:
    a. Kenko issues 700 shares of stock in exchange for all of Carex’s net assets. Prepare a balance
    sheet for the combined entity immediately following the merger
    b. Prepare the stockholders’ equity section of the combined company’s balance sheet,
    assuming Kenko acquires all of Carex’s net assets by issuing:
    1. 1,000 shares of common
    2. 2,000 shares of common
    3. 3,500 shares of common

    You might also like