Advanced Accounting: Chapter 3 Quiz Flashcards


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created 8 years ago by GreenHero64
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The study of accounting principles as it relates to business combinations, segment and interim reporting, legal reorganizations, liquidations, and partnerships.
updated 8 years ago by GreenHero64
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College: Third year, College: Fourth year
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accounting
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1
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PR Company pays $15,000 in cash and issues stock with a fair value of $45,000 to acquire all of SX Corporation's stock. SX will be a subsidiary of PR. Balance sheet accounts just prior to the acquisition are as follows, in trial balance format:

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PR's consultants find these items that are not reported on SX's balance sheet:

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Fair Value

Potential contracts w/ new customers $5,000

Advanced production technology $6,000

Future cost savings $1,500

Customer lists $3,000

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Outside consultants are paid $300 in cash, and registration fees to issue PR's new stock are $500. Total acquisition cost reported by PR (the debit to Investment on PR's books) is

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$60,000

$15,000 + $45,000 = $60,000

2

PR Company pays $20,000 in cash and issues stock with a fair value of $50,000 to acquire all of SX Corporation's stock. SX will be a subsidiary of PR.

Total acquisition cost reported by PR (the debit to Investment on PR's books) is

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$70,000

3

PR Company pays $5,000 in cash and issues stock with a fair value of $30,000 to acquire all of SX Corporation's stock. SX will be a subsidiary of PR.

Total acquisition cost reported by PR (the debit to Investment on PR's books) is

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$35,000

4

PR Company pays $10,000 in cash and issues stock with a fair value of $40,000 to acquire all of SX Corporation's stock. SX will be a subsidiary of PR.

Total acquisition cost reported by PR (the debit to Investment on PR's books) is

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$50,000

5

PR Company pays $10,000 in cash and issues stock with a fair value of $40,000 to acquire all of SX Corporation’s stock. SX will be a subsidiary of PR.

Total acquisition cost reported by PR (the debit to Investment on PR's books) is

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$50,000