KSU Liabilities and Equity Accounting Calculations

KSU Liabilities and Equity Accounting Calculations

 
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1.Baskin Corporation pays $ 420,000 for Camlin Inc. and that the estimated FMV of Assets, Liabilities and Equity are as follows: (1 Mark)



Account Receivable 100,000



Inventory 50,000



PP & E 200,000



Total Assets 350,000



Liabilities 70,000



Retained Earnings 80,000



Common Stock 200,000



Liabilities & Equities 350,000



Determine the amount of Goodwill.



2. Zaid Ltd and Zafar Ltd agreed to merge on January 1, 2019. On the date of the merger agreement, the companies reported the following data: (2 Marks)



Balance Sheet
Zaid Ltd
Zafar Ltd
Book Value
Fair Value
Book Value
Fair Value
Current Assets
190,000
240,000
50,000
62,000
Long Term Assets
600,000
500,000
300,000
275,000
Accumulated Depreciation
(130,000)
(50,000)
Total Assets
660,000
740,000
300,000
337,000
Current Liabilities
100,000
120,000
75,000
75,000
Common Stock
300,000
50,000
Capital in excess of Par Value
40,000
10,000
Retained Earnings
220,000
165,000
Total Liabilities
660,000
300,000




Zaid Ltd has 15,000 shares of its $20 par value shares outstanding on January 1, 20X3, and Zafar Ltd has 10,000 shares of $5 par value stock outstanding. The market values of the shares are $400 and $75, respectively.



Required:



Zaid Ltd issues 1,000 shares of stock in exchange for all of Zafar Ltd’s net assets. Prepare a balance sheet for the combined entity immediately following the merger.



Solution:



3. From the Given information Calculate the Book Value and pass Elimination entry: (2 Marks)



1)PQR Ltd owns 75% of STV Ltd.



2)STV Ltd ’s net income for 20X4 is SAR 250,000



3)PQR Ltd’s net income for 20X4 from its own separate operations is SAR 500,000.



4)STV Ltd’s declares dividends of SAR 36,000 during 20X4.



5)STV Ltd has 20,000 shares of $5 par stock outstanding that were originally issued at $15 per share.



6)STV Ltd’s beginning balance in Retained Earnings for 20X4 is SAR 150,0007 attachmentsSlide 1 of 7



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• The Assignment must be submitted on Blackboard (WORD format only) via allocated folder. • Assignments submitted through email will not be accepted. • Students are advised to make their work clear and well presented, marks may be reduced for poor presentation. This includes filling your information on the cover page. • Students must mention question number clearly in their answer. • Late submission will NOT be accepted. • Avoid plagiarism, the work should be in your own words, copying from students or other resources without proper referencing will result in ZERO marks. No exceptions. • All answered must be typed using Times New Roman (Size 12, Double-spaced) font. No pictures containing text will be accepted and will be considered plagiarism). 1. Baskin Corporation pays $ 420,000 for Camlin Inc. and that the estimated FMV of



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