value ($75 $1) is an increase to additional paid-in capital of $1,480,000 – ($74 × 20,000 shares). e. Fair of consideration transferred (above) $1,530,000 Receivables $ 80,000 Patented technology 700,000 Customer relationships 500,000 In-process research and development 300,000 Liabilities (400,000) 1,180,000 Goodwill $ 350,000 f. Revenues and expenses of the subsidiary from the period prior to the combination are omitted from the consolidated totals. Only the operational figures for the subsidiary after the purchase are applicable to the business combination. The previous owners earned any previous profits. g. The subsidiary’s Common Stock and Additional Paid-in Capital accounts have no impact on the consolidated totals. h. The fair value of the consideration transferred is now $1,030,000. This amount indicates a bargain purchase calculated as follows: Fair value of consideration transferred $1,030,000 Receivables $ 80,000 Patented technology 700,000 Customer relationships 500,000 Research and development asset 300,000 Liabilities (400,000) 1,180,000 Gain on bargain purchase $150,000 The values of SafeData’s assets and liabilities would be recorded at fair value, but there would be no goodwill recognized and a gain on bargain purchase would be reported. 31. (50 Minutes) (Prepare balance sheet for a statutory merger using the acquisition method. Also, use worksheet to derive consolidated totals.) a. In accounting for the combination of NewTune and On-the-Go, the fair value of the acquisition is allocated to each identifiable asset and liability acquired with any remaining excess attributed to goodwill. Fair value of consideration transferred (shares issued) $750,000 Fair value of net assets acquired: Cash $29,000 Receivables 63,000 Trademarks 225,000 Record music catalog 180,000 In-process research and development 200,000
value ($75 – $1) is an increase to additional paid-in capital of $1,480,000 ($74 × 20,000 shares). e. Fair of consideration transferred (above) $1,530,000 Receivables $ 80,000 Patented technology 700,000 Customer relationships 500,000 In-process research and development 300,000 Liabilities (400,000) 1,180,000 Goodwill $ 350,000 f. Revenues and expenses of the subsidiary from the period prior to the combination are omitted from the consolidated totals. Only the operational figures for the subsidiary after the purchase are applicable to the business combination. The previous owners earned any previous profits. g. The subsidiary’s Common Stock and Additional Paid-in Capital accounts have no impact on the consolidated totals. h. The fair value of the consideration transferred is now $1,030,000. This amount indicates a bargain purchase calculated as follows: Fair value of consideration transferred $1,030,000 Receivables $ 80,000 Patented technology 700,000 Customer relationships 500,000 Research and development asset 300,000 Liabilities (400,000) 1,180,000 Gain on bargain purchase $150,000 The values of SafeData’s assets and liabilities would be recorded at fair value, but there would be no goodwill recognized and a gain on bargain purchase would be reported. 31. (50 Minutes) (Prepare balance sheet for a statutory merger using the acquisition method. Also, use worksheet to derive consolidated totals.) a. In accounting for the combination of NewTune and On-the-Go, the fair value of the acquisition is allocated to each identifiable asset and liability acquired with any remaining excess attributed to goodwill. Fair value of consideration transferred (shares issued) $750,000 Fair value of net assets acquired: Cash $29,000 Receivables 63,000 Trademarks 225,000 Record music catalog 180,000 In-process research and development 200,000
Solution%20Manual%20for%20Fundamentals%20of%20Advanced%20Accounting%206th%20Edition%20Hoyle,%20Schaefer,%20Doupnik.docx