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- During the current year, an entity acquires another entity in a transaction properly accounted for as a business acquisition. At the time of the acquisition, some of the information for valuing assets was incomplete. How should the acquirer account for the incomplete information in preparing its financial statements immediately after the acquisition? a. Record the uncertain items at a provisional amount measured at the date of acquisition. b. Record a contra account to the investment account for the amount involved c. Do not record the uncertain items until complete information is available d. Record the uncertain items at the carrying amount of the acquireChoose the correct. When does gain recognition accompany a business combination?a. When a bargain purchase occurs.b. In a combination created in the middle of a fiscal year.c. In an acquisition when the value of all assets and liabilities cannot be determined.d. When the amount of a bargain purchase exceeds the value of the applicable noncurrent assets (other than certain exceptions) held by the acquired company.When does gain recognition accompany a business combination?a. When a bargain purchase occurs.b. In a combination created in the middle of a fiscal year.c. In an acquisition when the value of all assets and liabilities cannot be determined.d. When the amount of a bargain purchase exceeds the value of the applicable noncurrent assets (other than certain exceptions) held by the acquired company.
- On January 1, 2024, Presidio Company acquired 100 percent of the outstanding common stock of Mason Company. To acquire these shares, Presidio Issued to the owners of Mason $329,000 in long-term liabilities and 20,000 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Presidio paid $32,500 to accountants, lawyers, and brokers for assistance in the acquisition and another $17,000 in connection with stock Issuance costs. Prior to these transactions, the balance sheets for the two companies were as follows: Cash Presidio Company Mason Company $ 36,200 Items $ 81,900 Receivables 290,000 151,000 Inventory 378,000 178,000 Land 284,000 272,000 Buildings (net) 469,000 280,000 Equipment (net) 194,000 71,100 Accounts payable (179,000) (47,700) Long-term liabilities Common stock-$1 par value Common stock-$20 par value Additional paid-in capital Retained earnings, 1/1/24 (462,000) (329,000) (110,000) в 0 (120,000) (360,000) (585,900) (491,600) Note:…Acquisition accounting requires an acquirer and an acquirer to be identified for every business combination. Where a new entity (H) is created and two pre-existing entities, S and A, which of these entities will be designated as the acquirer? a. H b. S or A c. S d. A1. From the data below, determine the goodwill/gain on acquisition? 2. From the data below, determine the total assets of Play Corporation after the acquisition? 3. From the data below, determine the total liabilities of Play Corporation after the acquisition?
- Prepare the worksheet for preparing a consolidated statement of financial position on the date of acquisition. You may add accounts to the worksheet that may be necessary.Following the completion of a business combination in the form of a statutory consolidation, what is the balance in the new corporation’s Retained earnings account? A. The sum of the acquirer and acquiree retained earnings account balances. B. The acquirer retained earnings account balance C. Zero D. The acquiree retained earnings account balanceWhich statement is incorrect regarding reclassification of financial assets? A. Reclassifications are only permitted on the change of an entity's business model and are expected to occur only infrequently. B. None of these. C. An entity shall restate any previously recognized gains, losses (including impairment gains or losses) or interest. D. An entity shall account for transfers between categories prospectively, at the beginning of the period after the change in the business model.
- Statement I: During the measurement period, the acquirer shall prospectively adjust the provisional amounts recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of acquisition date.Statement II: Controlling interest is the equity in a subsidiary not attributable, directly or indirectly, to a parent. a. True, True b. False, False c. False, True d. True, FalseAt acquisition date the net assests of the acquired subsidairy are included in the consolidated financial statement at their acquisition date fair value. However most of the parent assets and liabilities are measured on an historical cost basis . Is this Consistent ? Explain.Statement I: In a business combination achieved in stages, the resulting gain or loss from the remeasurement of the acquirer’s previously held equity interest to its acquisition-date fair values shall be recognize in profit or loss or other comprehensive income.Statement II: The measurement period shall not exceed one year from the acquisition date. a. True, False b. False, False c. True, True d. False, True