高级会计学比姆斯第十版答案英文

Chapter 1BUSINESS COMBINATIONSAnswers to Questions1 A business combination is a union of business entities in which two or more previouslyseparate and independent companies are brought under the control of a single management team. F ASB Statement No. 141R describes three situations that establish the control necessary for a business combination, namely, when one or more corporations become subsidiaries, when one company transfers its net assets to another, and when each combining company transfers its net assets to a newly formed corporation.2The dissolution of all but one of the separate legal entities is not necessary for a business combination. An example of one form of business combination in which the separate legal entities are not dissolved is when one corporation becomes a subsidiary of another.In the case of a parent-subsidiary relationship, each combining company continues to exist as a separate legal entity even though both companies are under the control of a single management team.3 A business combination occurs when two or more previously separate and independentcompanies are brought under the control of a single management team. Merger and consolidation in a generic sense are frequently used as synonyms for the term business combination. In a technical sense, however, a merger is a type of business combination in which all but one of the combining entities are dissolved and a consolidation is a type of business combination in which a new corporation is formed to take over the assets of two or more previously separate companies and all of the combining companies are dissolved.4Goodwill arises in a business combination accounted for under the acquisition method when the cost of the investment (fair value of the consideration transferred) exceeds the fair value of identifiable net assets acquired. Under F ASB Statement No. 142, goodwill is no longer amortized for financial reporting purposes and will have no effect on net income, unless the goodwill is deemed to be impaired. If goodwill is impaired, a loss will be reocnized.5 A bargain purchase occurs when the acquisition price is less than the fair value of theidentifiable net assets acquired. The acquirer records the gain from a bargain purchase amount as an extraordinary gain during the period of the acquisition, under F ASB Statement No. 141R.SOLUTIONS TO EXERCISESSolution E1-11 a2 b3 a4 a5 dSolution E1-2 [AICPA adapted]1 aPlant and equipment should be recorded at the $55,000 fair value.2 cInvestment cost $800,000Less: Fair value of net assetsCash $ 80,000Inventory 190,000Property and equipment—net 560,000Liabilities (180,000) 650,000Goodwill $150,000Solution E1-3Stockholders’ equity—Pillow Corporation on January 3Capital stock, $10 par, 300,000 shares outstanding $3,000,000Additional paid-in capital[$200,000 + $1,500,000 – $5,000] 1,695,000Retained earnings 600,000 Total stockholders’ equity$5,295,000Entry to record combinationInvestment in Sleep-bank 3,000,000 Capital stock, $10 par 1,500,000 Additional paid-in capital 1,500,000Investment expense 10,000Additional paid-in capital 5,000 Cash 15,000Check: Net assets per books $3,800,000Goodwill 1,510,000Less: Expense of direct costs (10,000)Less: Issuance of stock (5,000)$5,295,000Journal entries on IceAge’s books to record the acquisitionInvestment in Jester 2,550,000Common stock, $10 par 1,200,000Additional paid-in capital 1,350,000To record issuance of 120,000 shares of $10 par common stock with a fair value of $2,550,000 for the common stock of Jester in a business combination.Additional paid-in capital 15,000Investment expenses 45,000Other assets 60,000To record costs of registering and issuing securities as a reduction of paid-in capital, and record direct and indirect costs of combination as expenses.Current assets 1,100,000Plant assets 2,200,000Liabilities 300,000Investment in Jester 3,000,000To record allocation of the $2,550,000 cost of Jester Company to identifiable assets and liabilities according to their fair values, computed as follows:Cost $2,550,000Fair value acquired 3,000,000Bargain purchase amount $ 450,000Investment in Jester 450,000Gain from bargain purchase 450,000To record gain from bargain purchase.Journal entries on the books of Danders Corporation to record merger with Harrison CorporationInvestment in Harrison 530,000Common stock, $10 par 180,000Additional paid-in capital 150,000Cash 200,000 To record issuance of 18,000 common shares and payment of cash in the acquisition of Harrison Corporation in a merger.Investment expenses 70,000Additional paid-in capital 30,000Cash 100,000 To record costs of registering and issuing securities and additionaldirect costs of combination.Cash 40,000Inventories 100,000Other current assets 20,000Plant assets—net 280,000Goodwill 160,000Current liabilities 30,000Other liabilities 40,000Investment in Harrison 530,000To record allocation of cost to assets received and liabilities assumed on the basis of their fair values and to goodwill computed as follows:Cost of investment $530,000Fair value of assets acquired 370,000Goodwill $160,000SOLUTIONS TO PROBLEMSSolution P1-1Preliminary computationsFair Value: Cost of investment in Sain at January 2(30,000 shares $20) $600,000 Book value (440,000) Excess fair value over book value $160,000Excess allocated to:Current assets $ 40,000 Remainder to goodwill 120,000 Excess fair value over book value $160,000Note: $25,000 direct costs of combination are expensed. Theexcess fair value of Pine’s buildings is not considered.Pine CorporationBalance Sheet at January 2, 2009AssetsCurrent assets($130,000 + $60,000 + $40,000 excess - $40,000 direct costs) $ 190,000Land ($50,000 + $100,000) 150,000Buildings—net ($300,000 + $100,000) 400,000Equipment—net ($220,000 + $240,000) 460,000Goodwill 120,000 Total assets $1,320,000Liabilities and Stockholders’ EquityCurrent liabilities ($50,000 + $60,000) $ 110,000Common stock, $10 par ($500,000 + $300,000) 800,000Additional paid-in capital335,000 [$50,000 + ($10 30,000 shares) — $15,000 costs of issuingand registering securities]Retained earnings (subtract $25,000 expensed direct cost) 75,000 Total liabilities and stockholders’ equity$1,320,000Solution P1-2Preliminary computationsFair Value: Cost of acquiring Seabird $825,000 Fair value of assets acquired and liabilities assumed 670,000 Goodwill from acquisition of Seabird $155,000Pelican CorporationBalance Sheetat January 2, 2009AssetsCurrent assetsCash [$150,000 + $30,000 - $140,000 expenses paid] $ 40,000 Accounts receivable—net [$230,000 + $40,000 fair value] 270,000 Inventories [$520,000 + $120,000 fair value] 640,000 Plant assetsLand [$400,000 + $150,000 fair value] 550,000 Buildings—net [$1,000,000 + $300,000 fair value] 1,300,000 Equipment—net [$500,000 + $250,000 fair value] 750,000Goodwill 155,000 Total assets $3,705,000Liabilities and Stockholders’ EquityLiabilitiesAccounts payable [$300,000 + $40,000] $ 340,000 Note payable [$600,000 + $180,000 fair value] 780,000 Stockholders’ equityCapital stock, $10 par [$800,000 + (33,000 shares $10)] 1,130,000Other paid-in capital[$600,000 - $40,000 + ($825,000 - $330,000)] 1,055,000Retained earnings (subtract $100,000 expensed direct costs) 400,000 Total liabilities and stockholders’ equity$3,705,000Solution P1-3Persis issues 25,000 shares of stock for Sineco’s outstanding shares1a Investment in Sineco 750,000Capital stock, $10 par 250,000Other paid-in capital 500,000 To record issuance of 25,000, $10 par shares with a market price of $30 per share in abusiness combination with Sineco.Investment expenses 30,000Other paid-in capital 20,000Cash 50,000 To record costs of combination in a business combination with Sineco.Cash 10,000Inventories 60,000Other current assets 100,000Land 100,000Plant and equipment—net 350,000Goodwill 180,000Liabilities 50,000Investment in Sineco 750,000To record allocation of investment cost to identifiable assets and liabilities according to theirfair values and the remainder to goodwill. Goodwill is computed: $750,000 cost - $570,000fair value of net assets acquired.1b Persis CorporationBalance SheetJanuary 2, 2009(after business combination)AssetsCash [$70,000 + $10,000] $ 80,000Inventories [$50,000 + $60,000] 110,000Other current assets [$100,000 + $100,000] 200,000Land [$80,000 + $100,000] 180,000Plant and equipment—net [$650,000 + $350,000] 1,000,000Goodwill 160,000Total assets $1,750,000Liabilities and Stockh olders’ EquityLiabilities [$200,000 + $50,000] $ 250,000Capital stock, $10 par [$500,000 + $250,000] 750,000 Other paid-in capital [$200,000 + $500,000 - $20,000] 680,000 Retained earnings (subtract $30,000 direct costs) 70,000 Total liabilities and stockholders’ equity$1,750,000Solution P1-3 (continued)Persis issues 15,000 shares of stock for Sineco’s outstanding shares2a Investment in Sineco (15,000 shares $30) 450,000Capital stock, $10 par 150,000Other paid-in capital 300,000 To record issuance of 15,000, $10 par common shares with a market price of $30 per share.Investment expense 30,000Other paid-in capital 20,000Cash 50,000 To record costs of combination in the acquisition of Sineco.Cash 10,000Inventories 60,000Other current assets 100,000Land 100,000Plant and equipment—net 350,000Liabilities 50,000Investment in Sineco 570,000 To record Sineco’s net assets at fair v alues.Investment in Sineco 120,000Gain on bargain purchase 120,000To record gain on bargain purchase and adjust Investment inSineco to reflect total fair value.Fair value of net assets acquired $570,000Investment cost (Fair value of consideration) 450,000 Gain on Bargain Purchase $120,0002b Persis CorporationBalance SheetJanuary 2, 2009(after business combination)AssetsCash [$70,000 + $10,000] $ 80,000Inventories [$50,000 + $60,000] 110,000Other current assets [$100,000 + $100,000] 200,000Land [$80,000 + $100,000] 180,000Plant and equipment—net [$650,000 + $350,000]1,000,000Total assets $1,570,000 Liabilities and stockholders’ equityLiabilities [$200,000 + $50,000] $ 250,000 Capital stock, $10 par [$500,000 + $150,000] 650,000 Other paid-in capital [$200,000 + $300,000 - $20,000] 480,000190,000 Retained earnings (subtract $30,000 direct costsand add $120,000 Gain from bargain purchase)Total liabilities and stockholders’ equity$1,570,000Solution P1-41Schedule to allocate investment cost to assets and liabilitiesInvestment cost (fair value), January 1 $300,000Fair value acquired from Sen ($360,000 100%) 360,000 Excess fair value over cost (bargain purchase gain) $ 60,000Allocation:AllocationCash $ 10,000Receivables—net 20,000Inventories 30,000Land 100,000Buildings—net 150,000Equipment—net 150,000Accounts payable (30,000)Other liabilities (70,000)Gain on bargain purchase (60,000)Totals $ 300,0002Phule CorporationBalance Sheetat January 1, 2009(after combination)Assets LiabilitiesCash $ 25,000 Accounts payable $ 120,000 Receivables—net 60,000 Note payable (5 years) 200,000 Inventories 150,000 Other liabilities 170,000 Land 145,000 Liabilities 490,000 Buildings—net 350,000Equipment—net 330,000 Stockholders’ EquityCapital stock, $10 par 300,000Other paid-in capital 100,000Retained earnings* 170,000Stockholders’ equity510,000 Total assets$1,060,000 Total equities $1,060,000* Retained earnings reflects the $60,000 gain on the bargain purchase.Solution P1-51 Journal entries to record the acquisition of Dawn CorporationInvestment in Dawn 2,500,000Capital stock, $10 par 1,000,000Other paid-in capital 1,000,000Cash 500,000 To record acquisition of Dawn for 100,000 shares of common stock and $500,000 cash.Investment expense 100,000Other paid-in capital 50,000Cash 150,000 To record payment of costs to register and issue the shares of stock ($50,000) and other costsof combination ($100,000).Cash 240,000Accounts receivable 360,000Notes receivable 300,000Inventories 500,000Other current assets 200,000Land 200,000Buildings 1,200,000Equipment 600,000Accounts payable 300,000Mortgage payable, 10% 600,000Investment in Dawn 2,700,000To record the net assets of Dawn at fair value.Investment in Dawn 200,000Gain on bargain purchase 200,000 To adjust Investment account to total fair value and recognizethe gain from the bargain purchase.Gain on Bargain Purchase CalculationAcquisition price $2,500,000Fair value of net assets acquired 2,700,000 Gain on bargain purchase $ 200,000Solution P1-5 (continued)2Celistia CorporationBalance Sheetat January 2, 2009(after business combination)AssetsCurrent AssetsCash $ 2,590,000Accounts receivable—net 1,660,000Notes receivable—net 1,800,000Inventories 3,000,000Other current assets 900,000 $ 9,950,000Plant AssetsLand $ 2,200,000Buildings—net 10,200,000Equipment—net 10,600,000 23,000,000Total assets $32,950,000 Liabilities and Stoc kholders’ EquityLiabilitiesAccounts payable $ 1,300,000Mortgage payable, 10% 5,600,000 $ 6,900,000Stockholders’ EquityCapital stock, $10 par $11,000,000Other paid-in capital 8,950,000Retained earnings* 6,000,000 26,050,000Total liabilities and stockholders’ equity$32,950,000* Subtract $100,000 direct combination costs and add $200,000 gain on bargainpurchase.RESEARCH CASE1.Journal entry to record the acquisition (in millions of $)Investment in Target 50,000Common stock, $0.10 par 100Additional paid-in capital 49,900 To record acquisition of Target for 1 billion shares of common stock having a fair value of $50per share.Cash 240,000Accounts receivable 360,000Notes receivable 300,000Inventories 500,000Other current assets 200,000Land 190,000Buildings 1,140,000Equipment 570,000Accounts payable 300,000Mortgage payable, 10% 600,000Investment in Target 2,600,000Assign the excess of fair value over book value of assets and liabilities as shown in thefollowing allocation schedule:Acquisition price $50,000 Excess fair value of assets acquiredInventory (10%) 625Land (20%) 987Buildings and improvements (20%) 3,222Fixtures and equipment (20%) 711Computer hardware and software (20%) 43821,859 Goodwill $ 28,1412.Consolidated Balance Sheet at January 31, 2007(millions, except footnotes) WAL-MART TARGET DR CR CONSOLI-DATED AssetsCash and cash equivalents 7,373 813 8,186 Accounts receivable, net 2,840 6,194 9,034 Inventory 33,685 6,254 625 40,564 Other current assets 2,690 1,445 4,135 Total current assets 46,588 14,706 61,294 Property and equipmentLand 18,612 4,934 987 24,533 Buildings and improvements 64,052 16,110 3,222 83,384 Fixtures and equipment 25,168 3,553 711 29,432 Computer hardware and software 2,188 438 2,626 Construction-in-progress 1,596 1,596 Transportation equipment 1,966 1,966 Accumulated depreciation (24,408) (6,950) (31,358) Property and equipment, net 85,390 21,431 106,821 Property Under Capital Lease 5,392 5,392 Less: Accumulated amortization (2,342) (2,342) Property Under Lease - net 3,050 3,050 Goodwill 13,759 28,141 41,900 Investment in Target 50,000 50,000 0 Other non-current assets 2,406 1,212 3,618 Total assets 201,193 37,349 238,542Liabilities and shareholders' investmentCommercial Paper 2,570 2,570 Accounts payable 28,090 6,575 34,665 Accrued and other current liabilities 14,675 2,758 17,433Income taxes payable 706 422 1,128Current portion of long-term debt and notes payable 5,428 1,362 6,790Current obligations capital leases 285 285 Total current liabilities 51,754 11,117 62,871Long-term debt 27,222 8,675 35,897Long term capital leases 3,513 3,513 Deferred income taxes 4,971 577 5,548 Noncontrolling Interest 2,160 2,160Other non-current liabilities 1,347 1,347 Shareholders' investmentCommon stock 513 72 72 513Additional paid-in-capital 52,734 2,387 2,387 52,734 Retained earnings 55,818 13,417 13,417 55,818 Accumulated other comprehensive income (loss) 2,508 (243) 2,265 Total shareholders' investment 111,573 15,633 127,206 Total liabilities and shareholders' investment 201,193 37,349 50,000 50,000 238,542Chapter 2STOCK INVESTMENTS — INVESTOR ACCOUNTING AND REPORTINGAnswers to Questions1Only the investor’s accounts are affected when outstanding stock is acquired from existing stockholders. The investor records the investment at its cost. Since the investee company is not a party to the transaction, its accounts are not affected.Both investor and investee accounts are affected when unissued stock is acquired directly from the investee. The investor records the investment at its cost and the investee adjusts its asset and owners’ equity accounts to reflect the issuance of previously unissued stock.2Goodwill arising from an equity investment of 20 percent or more is not recorded separately from the investment account. Under the equity method, the investment is presented on one line of the balance sheet in accordance with the one-line consolidation concept.3Dividends received from earnings accumulated before an investment is acquired are treated as decreases in the investment account balance under the fair value/cost method.Such dividends are considered a return of a part of the original investment.4The equity method of accounting for investments increases the investment account for the investor’s share of the investee’s income and decreases it for the investor’s share of the investee’s losses and for dividends received from the investee. In addition, the investment and investment income accounts are adjusted for amortization of any investment cost-book value differentials related to the interest acquired. Adjustments to the investment and investment income accounts are also needed for unrealized profits and losses from transactions between the investor and investee companies. A fair value adjustment is optional under SFAS No. 159.5The equity method is referred to as a one-line consolidation because the investment account is reported on one line of the investor’s balance sheet and investment income is reported on one line of the investor’s income statement (except when the i nvestee has extraordinary or cumulative-effect type adjustments). In addition, the investment income is computed such that the parent company’s income and stockholders’ equity are equal to the consolidated net income and consolidated stockholders’ equity t hat would result if the statements of the investor and investee were consolidated.6If the equity method of accounting is applied correctly, the income of the parent company will generally equal the controlling interest share of consolidated net income.7The difference in the equity method and consolidation lies in the detail reported, but notin the amount of income reported. The equity method reports investment income on one line of the income statement whereas the details of revenues and expenses are reported in the consolidated income statement.8The investment account balance of the investor will equal underlying book value of the investee if (a) the equity method is correctly applied, (b) the investment was acquired at book value which was equal to fair value, the pooling method was used, or the cost-book value differentials have all been amortized, and (c) there have been no intercompany transactions between the affiliated companies that have created investment account-book value differences.9The investment account balance must be converted from the cost to the equity method when acquisitions increase the interest held to 20 percent or more. The amount of the adjustment is the difference between the investment income reported under the cost method in prior years and the income that would have been reported if the equity method of accounting had been used. Changes from the cost to the equity method of accounting for equity investments are changes in the reporting entity that require restatement of prior years’ financial statements when the effect is material.10The one-line consolidation is adjusted when the investee’s income includes extraordinary items, gains or losses from discontinued operations, or cumulative-effect type adjustments.In thi s case, the investor’s share of the investee’s ordinary income is reported as investment income under a one-line consolidation, but the investor’s share of extraordinary items, cumulative-effect type adjustments, and gains and losses from discontinued operations is combined with similar items of the investor.11The remaining 15 percent interest in the investee is accounted for under the fair value/cost method, and the investment account balance immediately after the sale becomes the new cost basis.12Yes. When an investee has preferred stock in its capital structure, the investor has to allocate the investee’s income to preferred and common stockholders. Then, the investor takes up its share of the investee’s income allocated to common stockholders in apply ing the equity method. The allocation is not necessary when the investee has only common stock outstanding.13Goodwill impairment losses are calculated by business reporting units. For each reporting unit, the company must first determine the fair values of net assets. The fair value of thereporting unit is the amount at which it could be purchased in a current market transaction.This may be based on market prices, discounted cash flow analyses, or similar currenttransactions. This is done in the same manner as is done to originally record acombination. Any excess measured fair value is the fair value of goodwill. The companythen compares the goodwill fair value estimate to the carrying value of goodwill todetermine if there has been an impairment during the period.14Yes. Impairment losses for subsidiaries are computed as outlined in the solution to question 13. Companies compare fair values to book valuers for equity methodinvestments as a whole. Firms may recognize impairments for equity method investments as a whole, but perform no separate goodwill impairment.15Initial impairment losses recorded upon adoption of SFAS 142 are treated as the cumulative effect of an accounting change. Impairment losses resulting from subsequentannual reviews are included in the calculation of income from operations.1617 1819SOLUTIONS TO EXERCISESSolution E2-11 d2 c3 c4 d5 bSolution E2-2 [AICPA adapted]1 d2 b3 d4 bGrade’s investment is reported at its $300,000 cost because the equ ity method is notappropriate and because Grade’s share of Medium’s income exceeds dividends receivedsince acquisition [($260,000 ⨯15%) > $20,000].5 cDividends received from Zafacon for the two years were $10,500 ($70,000 ⨯15% - all in2009), but only $9,000 (15% of Zafacon’s income of $60,000 for the two years) can beshown on Torquel’s income statement as dividend income from the Zafacon investment.The remaining $1,500 reduces the investment account balance.6 c[$50,000 + $150,000 + ($300,000 ⨯10%)]7 a8 dInvestment balance January 2 $250,000 Add: Income from Pod ($100,000 ⨯30%) 30,000 Investment in Pod December 31 $280,000Solution E2-31B owman’s percentage ownership in TrevorBowman’s 20,000 shares/(60,000 + 20,000) shares = 25%2GoodwillInvestment cost $500,000 Book value ($1,000,000 + $500,000) ⨯25% (375,000)Goodwill $125,000 Solution E2-4Income from Medley for 2009Share of Medley’s income ($200,000 ⨯1/2 year ⨯30%) $ 30,0001Income from OakeyShare of Oakey’s reported income ($800,000 30%) $ 240,000 Less: Excess allocated to inventory (100,000)(50,000) Less: Depreciation of excess allocated to building($200,000/4 years)Income from Oakey $ 90,000 2Investment account balance at December 31Cost of investment in Oakey $2,000,000Add: Income from Oakey 90,000 Less: Dividends ($200,000 x 30%) (60,000) Investment in Oakey December 31 $2,030,000 Alternative solutionUnderlying equity in Oakey at January 1 ($1,500,000/.3) $5,000,000Income less dividends 600,000 Underlying equity December 31 5,600,000Interest owned 30% Book value of interest owned December 31 1,680,000Add: Unamortized excess 350,000 Investment in Oakey December 31 $2,030,000Solution E2-6Journal entry on Mar tin’s booksInvestment in Neighbors ($300,000 x 40%) 120,000Loss from discontinued operations 20,000Income from Kelly 140,000 To recognize income from 40% investment in Neighbors.1 aDividends received from Bennett ($120,000 ⨯15%) $ 18,000 Share of income since acquisition of interest2008 ($20,000 ⨯15%) (3,000)2009 ($80,000 ⨯15%) (12,000) Excess dividends received over share of income $ 3,000Investment in Bennett January 3, 2008 $ 50,000 Less: Excess dividends received over share of income (3,000) Investment in Bennett December 31, 2009 $ 47,0002 bCost of 10,000 of 40,000 shares outstanding $1,400,000Book value of 25% interest acquired ($4,000,000 stockholders’ equity at December31, 2008 +$1,400,000 from additional stock issuance) ⨯25% 1,350,000 Excess fair value over book value(goodwill) $ 50,0003 dThe investment in Monroe balance remains at the original cost.4 cIncome before extraordinary item $ 200,000 Percent owned 40% Income from Krazy Products $ 80,000Solution E2-8Preliminary computationsCost of 40% interest January 1, 2008 $2,400,000 Book value acquired ($4,000,000 ⨯40%) (1,600,000) Excess fair value over book value $ 800,000Excess allocated toInventories $100,000 ⨯40% $ 40,000 Equipment $200,000 ⨯40% 80,000 Goodwill for the remainder 680,000 Excess fair value over book value $ 800,000Raython’s underlying equity in Treaton ($5,500,000 ⨯40%) $2,200,000 Add: Goodwill 680,000Investment balance December 31, 2012 $2,880,000Alternative computationRaython’s share of the change in Treaton’s stockholders’equity ($1,500,000 ⨯40%) $ 600,000 Less: Excess allocated to inventories ($40,000 ⨯100%) (40,000) Less: Excess allocated to equipment ($80,000/4 years ⨯4 years) (80,000) Increase in investment account 480,000 Original investment 2,400,000 Investment balance December 31, 2012 $2,880,000Solution E2-91Income from RunnerShare of income to common ($400,000 - $30,000 preferreddividends) ⨯30% $ 111,0002Investment in Runner December 31, 2009NOTE: The $50,000 direct costs of acquiring the investment must be expensed whenincurred. They are not a part of the cost of the investment.Investment cost $1,200,000 Add: Income from Runner 111,000 Less: Dividends from Runner ($200,000 dividends - $30,000dividends to preferred) ⨯30% (51,000) Investment in Runner December 31, 2009 $1,260,000Solution E2-101Income from Tree ($300,000 – $200,000) ⨯25%Investment income October 1 to December 31 $ 25,0002Investment balance December 31Investment cost October 1 $ 600,000 Add: Income from Tree 25,000 Less: Dividends --- Investment in Tree at December 31 $ 625,000。