Assignment: Advanced Financial Accounting
Q1. Explain the term Acquisition and investments in intercorporate Entities.
Q2. X Inc. acquired 100% of the outstanding common stock of Y Inc. for $250,000 cash and 20,000 shares of its own common stock ($5 par value), which was trading at $10 per share at the acquisition date. The estimated fair market values of assets, liabilities, and equity accounts of Y. Inc are as follows:
Accounts Receivable $100,000 Liabilities$200,000
Inventory 50,000 Retained Earnings 50,000
LT Marketable sec.60,000 Common Stock 100,000
PP&E 140,000
Total Assets $350,000 Total Liab/Equity $ 350,000
Require:
1. Calculate Acquisition cost of X.Inc
2. Calculate Good will of X.Inc
3. Pass journal entry in books of X. Inc
Q3. SALMAN Company acquires 60 percent of HAMAD Company's common stock for $200,000 at the beginning of the year and gains significant influence over HAMAD. During the year, HAMAD has net income of $40,000 and pays dividends of $30,000.
Required:prepare the journal entries in books of SALMAN company under the Equity and Cost Method
Q4. From the Given information Calculate the Book Value and pass Basic Elimination entry :
1. PQR Ltd owns 100% of STV Ltd.
2. STV Ltd 's net income for 20X4 is SAR 250,000
3. STV Ltd's declares dividends of SAR 36,000 during 20X4.
4. STV Ltd has 20,000 shares of $5 par stock outstanding that were originally issued at $15 per share.
5. STV Ltd's beginning balance in Retained Earnings for 20X4 is SAR 150,000
Q5. How are direct combination costs, contingent consideration, and a bargain purchase reflected in recording an acquisition transaction?
Format your assignment according to the following formatting requirements:
1. The answer should be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
2. The response also include a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
3. Also Include a reference page. The Citations and references should follow APA format. The reference page is not included in the required page length.