Pangau, Timotius Vincent

Advance accounting 1
Paralel D

E1-2

1 Pop corporation paid $100.000 cash for the net assets of Son company, which consisted
of the following :
Book value Fair value
Current assets 40,000 56,000
Plant and equipment 160,000 220,000
Liabilities assumed -40,000 -36,000
160,000 240,000

Assume Son Company dissolved. The plant and equipment acquired in this business combination
should be record at?

2 On April 1, Pam Company paid $1.600.000 for all the issued and outstanding common stock of Sun
Corporation in a transaction properly accounted for as an acquisition. Sun Corporation is dissolved.
The recorded assets and liabilities of Sun corporation on April 1 follow :

Cash
Inventory
Property and equipment (net of accumulated depreciation of $640.000)
Liabilities

On April 1, it was determined that the inventory of Sun had a fair value of $380.000, and the
property and equipment (net) had a fair value of $1.120.000. What is the amount of goodwill
resulting from the acquisition?
 1 A. 220.000

ss combination

mon stock of Sun 2 Investment cost 1,600,000

tion is dissolved.
Less : Fair value of net assets
Cash 160,000
160,000 Inventory 380,000
480,000 Property and equipment net 1,120,000
960,000 Liabilities -360,000 1,300,000
-360,000 Goodwill C. 300,000
P1-1 Phen Ltd. Issued 500.000 common shares of $10 at par and paid $1.000.000
for the net assets of Sung Ltd. On August 17, 2014. The market value of
Phen Ltd.'s stocks was $20 per share at the time. Sung Ltd. Was dissolved
immediately after the acquisition. Prepare the necessary journal entries
for the acquisition
P1-1 Investment in Sung Ltd 11,000,000
Cash 1,000,000
Common stock, $10 par 5,000,000
Additional paid in capital 5,000,000