Does X, Inc control Z, Inc as a result of this agreement?
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X, Inc. is negotiating with Y, Inc. to acquire 100% of X, Inc.'s share capital. X, Inc. is currently owned by Y, Inc. and meets the definition of business defined in IFRS 3. The sale of shares is subject to approval by X, Inc.'s shareholders and the government. Because the agreement takes time, prior to the sale of shares, X, Inc and Y, Inc entered into an agreement that:
- Both parties settle it legally with the consent of the necessary agreements;
- Determine the purchase price;
- Determined that the following decisions and actions may be taken by Y, Inc. only with X, Inc's approval until the sale of shares, through:
o Changes in the management of Z, Inc;
o Dividend payment; and,
o New project contracts that exceed IDR 200 billion.
Does X, Inc control Z, Inc as a result of this agreement?
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- PT X is negotiating with PT Y to acquire 100% share capital of PT Z. PT Z is currently fully owned by PT Y and meets the business definition as defined in IFRS 3. Share sales must be approved by PT X shareholders and the government. Because the agreement takes time, before the time the share sale is completed, PT X and PT Y make an agreement that: • Both parties are committed to completing legally subject to the necessary agreements;• Determine the purchase price;• Determine that the following decisions and actions can be taken by PT Y only with PT X's approval until the sale of shares, through: o Changes in the management of PT Z; o Dividend payment; and, o New project contracts that exceed USD 200 billion. Does PT X control PT Z as a result of this agreement? Give references from the related IFRS.3. ABC Co. and XYZ, Inc. both engage in the same business. On January 1, 2021, ABC and XYZ signed a contract, the terms of which resulted in ABC obtaining control over XYZ without any transfer of consideration between the parties. The fair value of the identifiable net assets of XYZ Inc. on January 1, 2021 is P4,000,000. XYZ chose to measure non-controlling interest at the non-controlling interest's proportionate share of the acquiree's identifiable net assets.How much is the goodwill?Panther Company is about to acquire a 100% interest in Snake Company. Snake has identifiable net assets with book and fair values of $300,000 and $500,000, respectively. As payment, Panther will issue common stock with a fair value of $750,000. How would the transaction be recorded if the acquisition is: a. An acquisition of net assets? b. An acquisition of Snake’s common stock and Snake remains a separate legal entity?
- Pilgrim Products, Inc., buys a controlling interest in the common stock of Crestwood Corporation. Shortly after the acquisition, a meeting of Pilgrim's accounting department is convened to discuss the internal reporting procedures required by the ownership of this subsidiary. Each member of the staff has a definite opinion as to whether the equity method, initial value method, or partial equity method should be adopted. To resolve this issue, Pilgrim's chief financial officer outlines several of her concerns about the decision. I already understand how each method works. I know the general advantages and disadvantages of all three. I realize, for example, that the equity method provides more detailed information whereas the initial value method is much easier to apply. What I need to know are the factors specific to our situation that should be considered in deciding which method to adopt. I must make a recommendation to the president on this matter, and he will want firm reasons for…Your client, Lewison International, has informed you that it has reached an agreement with Herro Company to acquire all of Herro’s assets. This transaction will be accomplished through the issue of Lewison’s common stock. After your examination of the financial statements and the acquisition agreement, you have discovered the following important facts. The Lewison common stock issued has a fair value of $800,000. The fair value of Herro’s assets, net of all liabilities, is $700,000. All asset book values equal their fair values except for one machine valued at $200,000. This machine was originally purchased two years ago by Herro for $180,000. This machine has been depreciated using the straight-line method with an assumed useful life of 10 years and no salvage value. The acquisition is to be considered a taxfree exchange for tax purposes. Assuming a 30% tax rate, what amounts will be recorded for the machine, deferred tax liability, and goodwill?ABC Co. and XYZ, Inc. both engage in the same business. On January 1, 2021, ABC and XYZ signed a contract, the terms of which resulted in ABC obtaining control over XYZ without any transfer of consideration between the parties. The fair value of the identifiable net assets of XYZ Inc. on January 1, 2021 is ₱4,000,000. XYZ chose to measure non-controlling interest at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets. Required: How much is the goodwill?
- . Entity X and Entity Y incorporated Entity Z to manufacture a microchip to incorporate entities as componentsfor their final products for cellular phones and tablets.The contractual agreement of the incorporating entities provided that the decisions on relevant activities ofEntity C will require the unanimous consent of both entities.Entity X and Entity Y have rights to the assets, and obligations for the liabilities, relating to the agreement.Entity X and Entity Y will own the ordinary shares of Entity Z in the ratio of 60:40.The contractual agreement of Entity X and Entity Y also provided the following about the assets andliabilities of Entity Z:• Entity X owns the land and incurs the loan payable of Entity Z.• Entity Y owns the building and incurs the note payable of Entity Z.• The other assets and liabilities are owned by Entity X and Entity Y based on their capital interest inEntity Z. • The sales revenue of Entity Z includes sales to Entity X and Entity Y in the amount of…In the business combination of Polka and Spot Select one: a. all of the costs except those of registering and issuing the securities are included in the purchase price of Spot. b. the salaries of Polka's employees assigned to the merger are treated as expenses. c. only the accounting and legal fees are included in the purchase price of Spot d. the costs of registering and issuing the securities are included as part of the purchase price for Spot.Hippo Co. is a holding company. It holds all the shares of Opco. Shareholder H holds all the shares of Hippo Co. What should Opco be directed to do prior to its sale in order to minimize taxable capital gains? a. Transfer all assets to Hippo Co. before sale. b. Transfer all shares in Opco to Shareholder H prior to the sale c. Transfer all the shares of Hippo Co. to shareholder H prior to the sale. d. Pay a tax-free dividend to Hippo Co. from Opco prior to the sale
- Alfonso Inc. acquired 100 percent of the voting shares of BelAire Company on January 1, 2020. In exchange, Alfonso paid $548,750 in cash and issued 100,000 shares of its own $1 par value common stock. On this date, Alfonso’s stock had a fair value of $15 per share. The combination is a statutory merger with BelAire subsequently dissolved as a legal corporation. BelAire’s assets and liabilities are assigned to a new reporting unit. The following shows fair values for the BelAire reporting unit for January 1, 2020 along with respective carrying amounts on December 31, 2021. BelAire Reporting Unit Fair Values1/1/20 Carrying Amounts12/31/21 Cash $ 102,500 $ 52,500 Receivables 198,250 247,500 Inventory 235,250 262,500 Patents 821,000 898,500 Customer relationships 621,250 598,000 Equipment (net) 393,000 295,000 Goodwill ? 484,000 Accounts payable (126,500 ) (225,000 ) Long-term liabilities (680,000 )…Alfonso Inc. acquired 100 percent of the voting shares of BelAire Company on January 1, 2020. In exchange, Alfonso paid $461,000 in cash and issued 100,000 shares of its own $1 par value common stock. On this date, Alfonso's stock had a fair value of $15 per share. The combination is a statutory merger with BelAire subsequently dissolved as a legal corporation. BelAire's assets and liabilities are assigned to a new reporting unit. The following shows fair values for the BelAire reporting unit for January 1, 2020 along with respective carrying amounts on December 31, 2021. TT Fair Values 1/1/20 $ Carrying Amounts BelAire Reporting Unit Cash 12/31/21 $ 89,000 189,750 218,750 776, 500 586,000 355,000 48,000 243,000 258,000 860,000 546,000 269,000 452,000 (184,000) (518,000) Receivables Inventory Patents Customer relationships Equipment (net) Goodwill Accounts payable Long-term liabilities (114,500) (591,500) Note: Parentheses indicate a credit balance. a. Prepare Alfonso's journal entry…Alfonso Inc. acquired 100 percent of the voting shares of BelAire Company on January 1, 2020. In exchange, Alfonso paid $263,500 in cash and issued 100,000 shares of its own $1 par value common stock. On this date, Alfonso's stock had a fair value of $15 per share. The combination is a statutory merger with BelAire subsequently dissolved as a legal corporation. BelAire's assets and liabilities are assigned to a new reporting unit. The following shows fair values for the BelAire reporting unit for January 1, 2020 along with respective carrying amounts on December 31, 2021. BelAire Reporting Unit Cash Receivables Inventory Patents Customer relationships Equipment (net) Goodwill Accounts payable Long-term liabilities Note: Parentheses indicate credit balance. Fair Values 1/1/20 68,000 182,500 219,000 $ 371,500 603,500 404,500 ? (123,500) (524,000) Carrying Amounts $ 12/31/21 41,000 236,000 251,000 467,000 574,000 339,000 562,000 (188,000) (452,000) a. Prepare Alfonso's journal entry to…