ACQUISITION Answers to Discussion Questions How Does a Company Really Decide which Investment Method to Apply? Students can come up with literally dozens of factors that should be considered by Pilgrim in making the decision as to the method of accounting for its subsidiary, Crestwood Corporation. The following is simply a partial list of possible points to consider. Use of the information. If Pilgrim does not monitor its own income levels closely, applying the equity method would seem to be a waste
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Chapter 1 Introduction to Business Combinations and the Conceptual Framework Multiple Choice 1. Stock given as consideration for a business combination is valued at a. fair market value 2. Which of the following situations best describes a business combination to be accounted for as a statutory merger? b. Only one of the combining companies survives and the other loses its separate identity. 3. A firm can use which method of financing for an acquisition structured as either an
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CHAPTER 7 ------------------------------------------------- SUGGESTED ANSWERS Exercise 7-1 1. | | 2006 | 2007 | 2008 | | Contract price | P50,000,000 | P50,000,000 | P50,000,000 | | Cost incurred to date | P 7,500,000 | P34,500,000 | P40,800,000 | | Est. cost to complete | 30,000,000 | 8,625,000 | - | | | | | __________ | | Total estimated cost | 37,500,000 | P43,125,000 | P40,800,000 | | Total estimated gross profit | P12,500,000 | P 6,875,000 | P 9,200,000
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ch 1 Student: ___________________________________________________________________________ 1. Gaw Company owns 15% of the common stock of Trace Corporation and used the fair-value method to account for this investment. Trace reported net income of $110,000 for 2011 and paid dividends of $60,000 on October 1, 2011. How much income should Gaw recognize on this investment in 2011? A. $16,500. B. $9,000. C. $25,500. D. $7,500. E. $50,000. Yaro Company owns 30% of the common stock of Dew Co. and
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UTI-1 The intrinsic value of a put option is the happened when strike price bigger than spot price. And the value will be calculate as difference between the price times notional amount. The time value of a put option is using the fair value of option subtract the intrinsic value The intrinsic value of a forward option is difference between the forward rate for farward closing at forward date and farward rate in contract times notional amount. Time value if the total change between the forward
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Chapter 1 the equity method of accounting for investments Answers to Questions 1. The equity method should be applied if the ability to exercise significant influence over the operating and financial policies of the investee has been achieved by the investor. However, if actual control has been established, consolidating the financial information of the two companies will normally be the appropriate method for reporting the investment. 2. According to Paragraph 17 of APB Opinion 18, "Ability
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------------------------------------------------- ACCT3050 ASSIGNMENT, CHAP 2 1. | Lisa Co. paid cash for all of the voting common stock of Victoria Corp. Victoria will continue to exist as a separate corporation. Entries for the consolidation of Lisa and Victoria would be recorded in: A. | A worksheet. | B. | Lisa's general journal. | C. | Victoria's general journal. | D. | Victoria's secret consolidation journal. | E. | The general journals of both companies. |
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14/05/2014 Mixed Costs Total Mixed Cost VC Per Unit (Slope) Purpose of Mixed Cost Analysis To predict cost at an activity level with no historical record: Total mixed cost line can be expressed as: 2N Y Total Utility Cost Fixed Cost (Intercept) Level of Activity If your fixed monthly utility charge is $40, your variable cost is $0.03 per kilowatt hour, can you predict the utility of next month when you plan to use 2,000 kilowatt hours? Y = a + bX Variable Cost per KW
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Introduction It is a requirement that, if an entity is defined as a reporting entity, it is required to release financial reports that comply with the Australian Accounting Standards Board (AASB) (Deegan 2008:83). Two companies have been chosen to analyse their reports, in particular the disclosures made in their respective reports. The two companies chosen to analyse are Commonwealth Bank of Australia (CBA) and Macquarie Bank Limited (MBL). CBA The Commonwealth Bank is one of Australia’s
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Assignment 2 1. On February 7, 2014, a subsidiary sold land to its parent for $25,000, and showed a loss of $4,000. The parent sold the land to an outside party in 2018 for $30,000. At what amount should the land be shown on the December 31, 2014 consolidated balance sheet? How much gain/loss on the sale of the land should be reported on the 2018 consolidated income statement? Prepare the working paper entry (in journal entry format) for the intercompany sale for the parent and its subsidiary
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