[Appendix] Journal entries to record a pooling On January 1, 2000, Pam Corporation held 2,000 shares of Sun Corporation common stock acquired at $15 per share several years earlier. On this date, Pam...


[Appendix] Journal entries to record a pooling<br>On January 1, 2000, Pam Corporation held 2,000 shares of Sun Corporation common stock acquired at $15 per share<br>several years earlier. On this date, Pam issued 1.5 of its $10 par value shares for each of the other 98,000 outstand-<br>ing shares of Sun in a pooling of interests in which Sun Corporation was dissolved. Sun Corporation's after-closing<br>trial balance on December 31, 1999, consisted of the following (in thousands):<br>$ 800<br>1,500<br>Current assets<br>Plant and equipment-net<br>Liabilities<br>Capital stock, $5 par<br>Additional paid-in capital<br>Retained earnings<br>$ 200<br>500<br>1,000<br>600<br>$2,300<br>$2,300<br>REQUIRED: Prepare a journal entry (or entries) on Pam's books to account for the pooling of interests.<br>(Hint: Do not forget to consider the 2,000 shares of Sun held by Pam on January 1, 2000.)<br>PROBLEMS<br>P1-1<br>Acquisition journal entries<br>Phen Ltd. issued 500,000 common shares of $10 at par and paid $1,000,000 for the net assets of<br>Sung Ltd. on August 17, 2014. The market value of Phen Ltd.'s stocks was $20 per share at the time.<br>Sung Ltd. was dissolved immediately after the acquisition. The information related to Sung Ltd.'s<br>net assets is as follows (in thousands):<br>Book Value Fair Value<br>Cash<br>$2,000<br>$2,000<br>Trade receivables<br>800<br>600<br>3,200<br>1,000<br>6,000<br>Inventories<br>Prepaid expenses<br>Land<br>Building-net<br>Equipment-net<br>Trade payable<br>Notes payable<br>Bonds payable<br>Common stock, $5 par<br>Retained Earnings<br>3,000<br>1,000<br>6,800<br>10,100<br>3,000<br>1,500<br>4,600<br>7,100<br>10,000<br>3,500<br>1,300<br>4,300<br>6,600<br>5,300<br>9,000<br>REQUIRED: Prepare the necessary journal entries for the acquisition.<br>P1-2<br>Balance sheet after an acquisition<br>On December 31, Jose SA acquired Carlos SA by issuing 200,000 common shares with a par value<br>of $10. The market value for these common shares was $10,000,000 at the date of acquisition. Below<br>is the balance sheet and fair value information for Jose SA and Carlos SA immediately before the<br>acquisition (in thousands):<br>Business Combinations<br>47<br>Jose SA<br>Jose SA<br>Carlos SA<br>Carlos SA<br>(Book Value)<br>(Fair Value)<br>(Book Value)<br>(Fair Value)<br>$2,000<br>13,000<br>15,000<br>5,000<br>12,000<br>$2,000<br>20,000<br>20,000<br>S1,000<br>8,000<br>10,000<br>2,000<br>$1,000<br>12,000<br>13,000<br>4,000<br>13,000<br>4,000<br>12,000<br>8,000<br>O par<br>10,000<br>5,000<br>3,000<br>4,000<br>

Extracted text: [Appendix] Journal entries to record a pooling On January 1, 2000, Pam Corporation held 2,000 shares of Sun Corporation common stock acquired at $15 per share several years earlier. On this date, Pam issued 1.5 of its $10 par value shares for each of the other 98,000 outstand- ing shares of Sun in a pooling of interests in which Sun Corporation was dissolved. Sun Corporation's after-closing trial balance on December 31, 1999, consisted of the following (in thousands): $ 800 1,500 Current assets Plant and equipment-net Liabilities Capital stock, $5 par Additional paid-in capital Retained earnings $ 200 500 1,000 600 $2,300 $2,300 REQUIRED: Prepare a journal entry (or entries) on Pam's books to account for the pooling of interests. (Hint: Do not forget to consider the 2,000 shares of Sun held by Pam on January 1, 2000.) PROBLEMS P1-1 Acquisition journal entries Phen Ltd. issued 500,000 common shares of $10 at par and paid $1,000,000 for the net assets of Sung Ltd. on August 17, 2014. The market value of Phen Ltd.'s stocks was $20 per share at the time. Sung Ltd. was dissolved immediately after the acquisition. The information related to Sung Ltd.'s net assets is as follows (in thousands): Book Value Fair Value Cash $2,000 $2,000 Trade receivables 800 600 3,200 1,000 6,000 Inventories Prepaid expenses Land Building-net Equipment-net Trade payable Notes payable Bonds payable Common stock, $5 par Retained Earnings 3,000 1,000 6,800 10,100 3,000 1,500 4,600 7,100 10,000 3,500 1,300 4,300 6,600 5,300 9,000 REQUIRED: Prepare the necessary journal entries for the acquisition. P1-2 Balance sheet after an acquisition On December 31, Jose SA acquired Carlos SA by issuing 200,000 common shares with a par value of $10. The market value for these common shares was $10,000,000 at the date of acquisition. Below is the balance sheet and fair value information for Jose SA and Carlos SA immediately before the acquisition (in thousands): Business Combinations 47 Jose SA Jose SA Carlos SA Carlos SA (Book Value) (Fair Value) (Book Value) (Fair Value) $2,000 13,000 15,000 5,000 12,000 $2,000 20,000 20,000 S1,000 8,000 10,000 2,000 $1,000 12,000 13,000 4,000 13,000 4,000 12,000 8,000 O par 10,000 5,000 3,000 4,000
Jun 11, 2022
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