Earsplitting Music Inc. has acquired 60% of Raucous Sound, while Deafening Systems Corp. has purchased the remaining 40% of the company. The term joint venture applies even though two companies are purchasing another existing company. True False
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- 4.James Corporation, an 80%- owned subsidiary of Thomas Company, buys half of its raw materials from Thomas. The transfer price is exactly the same price as James pays to buy identical raw materials from outside suppliers and the same price as Thomas sells the materials to unrelated customers. In preparing consolidated statements for Thomas Company and Subsidiary James Corporation, [a] the intercompany transactions can be ignored because the transfer price represents arm's length bargaining. [b] any unrealized profit from intercompany sales remaining in Thomas' ending inventory must be offset against the unrealized profit in Thomas' beginning inventory. [c] any unrealized profit on the intercompany transactions in James's ending inventory is eliminated in its entirety. [d] eighty percent of any unrealized profit on the intercompany transactions in James's ending inventory is eliminated.Alpha Corporation owns 100% of Beta Corporation. Beta Corporation owns 100% of Omega Corporation that has a NOLCO. Omega Corporation is merged with Beta Corporation. Which of the following statements is correct? Omega Corporation’s NOLCO can be used by it to the exclusion of all other parties. Omega Corporation’s NOLCO can no longer be used. Omega Corporation’s NOLCO is transferred to Alpha Corporation. Omega Corporation’s NOLCO is transferred and can be used by Beta Corporation.Pratt Company acquired all of the outstanding shares of Spider, Inc., on December 31, 2021, for $488,900 cash. Pratt will operate Spider as a wholly owned subsidiary with a separate legal and accounting identity. Although many of Spider’s book values approximate fair values, several of its accounts have fair values that differ from book values. In addition, Spider has internally developed assets that remain unrecorded on its books. In deriving the acquisition price, Pratt assessed Spider’s fair and book value differences as follows: Book Values Fair Values Computer software $ 28,000 $ 68,750 Equipment 69,500 59,400 Client contracts 0 112,000 In-process research and development 0 24,500 Notes payable (72,500 ) (79,000 ) At December 31, 2021, the following financial information is available for consolidation (credit balances in parentheses): Pratt Spider Cash $ 18,700 $ 16,000 Receivables 118,500 57,500…
- ABC Company acquired XYZ Company in an acquisition. What date should be used as the acquisition date for the transaction? * The date ABC signs the contract to purchase the business. The date ABC obtains control of XYZ. The date that all contingencies related to the transaction are resolved. The date ABC purchased more than 20% of the stock of XYZ.A press release issued today announced that Ingram Distribution has acquired Johnson Transport. The press release explained that both firms ceased to exist in their prior forms and had combined to create an entirely new entity called Move! Which one of the following terms best describes this transaction? Multiple Choice Tender offer Spinoff Divestiture Conglomeration ConsolidationOutlook Inc. merges with Pinnacle Inc. Only Pinnacle remains. Refer to Fact Pattern 31-1. Outlook held rights in certain real property. With regard to these assets, in the merger Pinnacle assumes a. all of Outlook’s assets. b. an amount of assets equal to the ratio of the firms’ pre-merger market values. c. none of Outlook’s assets. d. only those assets acquired after the merger was proposed.
- Pratt Company acquired all of Spider, Inc.’s outstanding shares on December 31, 2018, for $495,000 cash. Pratt will operate Spider as a wholly owned subsidiary with a separate legal and accounting identity. Although many of Spider’s book values approximate fair values, several of its accounts have fair values that differ from book values. In addition, Spider has internally developed assets that remain unrecorded on its books. In deriving the acquisition price, Pratt assessed Spider’s fair and book value differences as follows: Book Values Fair Values Computer software $ 20,000 $ 70,000 Equipment 40,000 30,000 Client contracts –0– 100,000 In-process research and development –0– 40,000 Notes payable (60,000) (65,000) At December 31, 2018, the following financial information is available for consolidation: Pratt Spider Cash $ 36,000 $ 18,000 Receivables…Pratt Company acquired all of the outstanding shares of Spider, Inc., on December 31, 2021, for $495,000 cash. Pratt will operate Spider as a wholly owned subsidiary with a separate legal and accounting identity. Although many of Spider’s book values approximate fair values, several of its accounts have fair values that differ from book values. In addition, Spider has internally developed assets that remain unrecorded on its books. In deriving the acquisition price, Pratt assessed Spider’s fair and book value differences as follows: Book Values Fair Values Computer software $ 20,000 $ 70,000 Equipment 40,000 30,000 Client contracts 0 100,000 In-process research and development 0 40,000 Notes payable (60,000 ) (65,000 ) At December 31, 2021, the following financial information is available for consolidation (credit balances in parentheses): Pratt Spider Cash $ 36,000 $ 18,000 Receivables 116,000…How does joint control differ from control as applied on consolidation? Oceania Limited acquired 100% of the share capital of Broadwater Limited. Broadwater had total shareholder's equity of $500 000. The book values of Broadwater Limited's assets were: buildings $30o 000, machinery $180 000. The fair values of these assets were: buildings $360 000, machinery $200 000. The tax rate is 30%. The fair value of the identifiable net assets is: a. $580 000 b. $420 000 c. $556 000 d. $444 444
- King’s Road recently acquired all of Oxford Corporation’s stock and is now consolidating the financial data of this new subsidiary. King’s Road paid a total of $850,000 for Oxford, which has the following accounts:a. What amount of deferred tax liability arises in the acquisition?b. What amounts will be used to consolidate Oxford with King’s Road at the date of acquisition?c. On a consolidated balance sheet prepared immediately after this takeover, how much goodwill should King’s Road recognize? Assume a 40 percent effective tax rate.Pratt Company acquired all of the outstanding shares of Spider, Inc., on December 31, 2021, for $550,200 cash. Pratt will operate Spider as a wholly owned subsidiary with a separate legal and accounting identity. Although many of Spider's book values approximate fair values, several of its accounts have fair values that differ from book values. In addition, Spider has internally developed assets that remain unrecorded on its books. In deriving the acquisition price, Pratt assessed Spider's fair and book value differences as follows: Computer software Equipment Client contracts In-process research and development Notes payable Cash Receivables Inventory Investment in Spider Computer software Buildings (net) Equipment (net) Client contracts will At December 31, 2021, the following financial information is available for consolidation (credit balances in parentheses): Total assets Accounts payable Notes payable Common stock Additional paid-in capital Retained earnings Total liabilities and…X, Inc. is negotiating with Y, Inc. to acquire 100% of X, Inc.'s share capital. X, Inc. is currently owned by Y, Inc. and meets the definition of business defined in IFRS 3. The sale of shares is subject to approval by X, Inc.'s shareholders and the government. Because the agreement takes time, prior to the sale of shares, X, Inc and Y, Inc entered into an agreement that: Both parties settle it legally with the consent of the necessary agreements; Determine the purchase price; Determined that the following decisions and actions may be taken by Y, Inc. only with X, Inc's approval until the sale of shares, through: o Changes in the management of Z, Inc; o Dividend payment; and, o New project contracts that exceed IDR 200 billion. Does X, Inc control Z, Inc as a result of this agreement?