1. Trident Corporation acquires Uvell Company’s assets andliabilities for $40,000,000 in cash. At the date of acquisition,Uvell’s balance sheet reported assets of $90,000,000 andliabilities of $82,000,000. Investigation reveals that Uvell’sbuildings are overvalued by $6,000,000 and it has unreportedliabilities valued at $5,000,000.
What journal entry will Trident Corp record as a result of thisacquisition?
2. An acquiring company pays $45 million in cash, and issues newno-par stock with a fair value of $75 million, to the acquiredcompany’s former owners, for the assets and liabilities of theacquired company. Registration fees associated with the new stockissuance are $300,000, paid in cash. Consulting fees for theacquisition are $1 million, paid in cash. The fair value of theacquired company’s identifiable net assets is $65 million.
What entry does the acquiring company make to record theacquisition?
3. A company invests $300,000 in equity securities on November30, 2019, and classifies them as investments with no significantinfluence. At December 31, 2019, the company’s year-end, thesecurities have a fair value of $310,000. On February 1, 2020, thecompany sells the securities for $295,000.
What is reported on the Balance Sheet and Income Statementregarding the securities for 2019 and 2020?
4. Precision Company acquires all of Springfield Company’svoting stock for $5,000,000 in cash. Information on Springfield'sassets and liabilities at the date of acquisition is asfollows:
Book Values
Current assets $ 500,000
Land, buildings and equipment (net) $2,000,000
Liabilities ($600,000)
Capital stock ($500,000)
Retained earnings ($1,400,000)
Fair Values
Current assets $700,000
Land, buildings and equipment (net) $3,500,000
Liabilities ($550,000)
Capital stock
Retained earnings
In addition, Springfield Company has unrecorded identifiableintangible assets, in the form of brand names and lease agreements,with a total estimated fair value of $400,000.
Prepare the eliminating entries
