Scribd
Upload
8K views7 pages

Advance Accounting

The document discusses two journal entries to record the acquisition of Huang Corporation by Ling Corporation. The first acquisition was for cash of $50,000 and allocated the investment cost across Huang's assets and liabilities, resulting in a $50,000 bargain purchase gain. The second acquisition was for cash of $100,000, with $25,000 recorded as goodwill on Ling's balance sheet. Both acquisitions increased Ling's total assets and stockholders' equity.

Uploaded by

Putri anjjarwati
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
8K views7 pages

Advance Accounting

The document discusses two journal entries to record the acquisition of Huang Corporation by Ling Corporation. The first acquisition was for cash of $50,000 and allocated the investment cost across Huang's assets and liabilities, resulting in a $50,000 bargain purchase gain. The second acquisition was for cash of $100,000, with $25,000 recorded as goodwill on Ling's balance sheet. Both acquisitions increased Ling's total assets and stockholders' equity.

Uploaded by

Putri anjjarwati
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
You are on page 1/ 7

P1-4

Bargain purchase, allocation schedule, and balance sheet

1. Schedule to allocate investment cost to assests and liabilities


Investment cost (fair value), January 1 $ 250,000
Fair value acquired from Diego ($300,000 X 100%) $ 300,000
Excess fair value over cost (bargain purchase gain) $ 50,000

Allocation :
Cash $ 40,000
Receivables-net $ 30,000
Inventories $ 100,000
Land $ 50,000
Buildings-net $ 100,000
Equipment-net $ 75,000
Account payable $ (50,000)
Other liabilities $ (45,000)
Gain on bargain purchase $ (50,000)
TOTALS $ 250,000

2. Balance sheet for Pablo Corporation on January 1, 2017

Pablo Corporation
Balance sheet
at January 1, 2017
(after combination)
Assets Liabilities and Equity
Cash $ 90,000 Liabilities
Receivables-net $ 80,000 Account payable $ 130,000
Inventories $ 230,000 Not payable (5 years) $ 200,000
Land $ 100,000 Other liabilities $ 145,000
Buildings-net $ 250,000 Total liabilities $ 475,000
Equipment-net $ 175,000
Stock Holders Equity
Capital stock, $10 par $ 200,000
Other paid in capital $ 100,000
Reatained earning $ 150,000
Total stock holders equity $ 450,000

Total Assets $ 925,000 Total Liabilities & Equity $ 925,000


P1-5
Jurnal entries and balance sheet for an acquisition

1. Journal entries to record the acquisition of Huang Corporation (cash $ 50,000)


Investment in Huang $ 350,000
Capital stock, $10 par $ 100,000
Other paid-in capital $ 200,000
Cash $ 50,000
To record acquisition of Huang 10,000 shares of common stock and $50,000 cash
Investment expense $ 10,000
Other paid-in capital $ 30,000
Cash $ 40,000
To record costs of registering (10,000) and for accounting and legal fees (30,000)

Allocation :
Cash $ 50,000
Receivables-net $ 50,000
Inventories $ 100,000
Land $ 100,000
Buildings-net $ 100,000
Equipment-net $ 100,000
Account payable $ 50,000
Other liabilities $ 75,000
Invenstment in Huang $ 350,000
Gain on bargain purchase $ 25,000
To record the net assets of Huang at Fair Value and gain on bargain purchase

Gain on Bargain Purchase Calculation:


Acquisition price $ 350,000
Fair value of net assets acquired $ (375,000)
Gain on Bargain Purchase $ (25,000)

Ling Corporation
Balance sheet
at January 1, 2016
(after business combination)
Assets Liabilities and Equity
Cash $ 960,000 Liabilities
Receivables-net $ 800,000 Account payable
Inventories $ 1,600,000 Other liabilities
Land $ 1,100,000 Total liabilities
Buildings-net $ 2,100,000
Equipment-net $ 1,600,000 Stock Holders Equity
Capital stock, $10 par
Other paid in capital
Retained earning
Total stock holders equity

Total Assets $ 8,160,000 Total Liabilities & Equity


2. Journal entries to record the acquisition of Huang Corporation (cash $ 100,000)
Investment in Huang $ 400,000
Capital stock, $10 par $ 100,000
Other paid-in capital $ 200,000
Cash $ 100,000
To record acquisition of Huang 10,000 shares of common stock and $100,000 cash
Investment expense $ 10,000
Other paid-in capital $ 30,000
Cash $ 40,000
30,000) To record costs of registering (10,000) and for accounting and legal fees (30,000)

Allocation :
Cash $ 50,000
Receivables-net $ 50,000
Inventories $ 100,000
Land $ 100,000
Buildings-net $ 100,000
Equipment-net $ 100,000
Goodwill $ 25,000
Account payable $ 50,000
Other liabilities $ 75,000
Invenstment in Huang $ 400,000
ase
To record the net assets of Huang at Fair Value and goodwill
Goodwill Calculation:
Acquisition price $ 400,000
Fair value of net assets acquired $ (375,000)
Goodwill $ 25,000

Ling Corporation
Balance sheet
at January 1, 2016
(after business combination)
Assets
Cash $ 910,000
$ 850,000 Receivables-net $ 800,000
$ 1,075,000 Inventories $ 1,600,000
$ 1,925,000 Land $ 1,100,000
Buildings-net $ 2,100,000
Equipment-net $ 1,600,000
$ 3,100,000 Goodwill $ 25,000
$ 1,370,000
$ 1,765,000
$ 6,235,000

$ 8,160,000 Total Assets $ 8,135,000


g Corporation (cash $ 100,000)

ares of common stock and $100,000 cash

d for accounting and legal fees (30,000)

Value and goodwill

Corporation
lance sheet
nuary 1, 2016
ness combination)
Liabilities and Equity
Liabilities
Account payable $ 850,000
Other liabilities $ 1,075,000
Total liabilities $ 1,925,000

Stock Holders Equity


Capital stock, $10 par $ 3,100,000
Other paid in capital $ 1,370,000
Retained earning $ 1,740,000
Total stock holders equity $ 6,210,000

Total Liabilities & Equity $ 8,135,000

You might also like