Module 1 – Business Combination and Consolidation Stock Acquisition – Consolidated Financial Statements - Date of Acquisition Instructor Comment: The following lesson module was developed to assist...

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Answered Same DayDec 22, 2021

Answer To: Module 1 – Business Combination and Consolidation Stock Acquisition – Consolidated Financial...

David answered on Dec 22 2021
121 Votes
Solution 1:
Paper & Ink Corporation: They bought 75% of stock using cash. For them the cash will b
e
decreased by $3.1 million out of which 416,826 will go to Additional paid in capital. Hence the
net effect in cash would be a decrease of $ 2,683,174(Debit amount). There has to be an increase
of the same amount that will be reflected in common stock value of $111,600(Credit balance)
and rest increase in APIC(Credit balance).
Smooth Solutions: There will no change in the ledger account of the smooth solutions. The
reason is that there is no change of assets or liability for the company. It is just that the stocks
have exchanged hands at the market price. Now the names...
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