ASISTENSI AKUNTANSI KEUANGAN LANJUTAN

Juwita Ramadhani

Pertemuan 1:
Intercorporate Acquisition and Investments in Other Entities
Reporting Intercorporate Investments and Consolidation of Wholly Owned with No Difference
combination agreement with Hydrolized Chemical Corporation (HCC) to ensure an
uninterrupted supply of key raw materials and to realize certain economies from
P1 25 combining the operating processes and the marketing efforts of the two companies.
Eagle Corporation established a subsidiary to enter into a new line of business Under the terms of the agreement, Bigtime issued 180,000 shares of its $1 par common
considered to be substantially more risky than Eagles current business. Eagle stock in exchange for all of HCCs assets and liabilities. The Bigtime shares then were
transferred the following assets and accounts payable to Sand Corporation in exchange distributed to HCCs shareholders, and HCC was liquidated.
for 5,000 shares of $10 par value stock of Sand:
Immediately prior to the combination, HCCs balance sheet appeared as follows, with
Cost Book Value fair values also indicated:

Cash $ 30,000 $ 30,000

Accounts Receivable 45,000 40,000
Inventory 60,000 60,000
Book Value Fair Value
Land 20,000 20,000
Buildings & Equipment 300,000 260,000 Assets
Accounts Payable 10,000 10,000 Cash $ 28,000 $ 28,000
Accounts Receivable 258,000 251,500
Less: Allowance for Bad Debts (6,500)
Liabilities Inventory 381,000 395,000
Required: Current Payables Long-Term $Investments
137,200 $ 137,200 150,000 175,000
a. Identify the type of this business expansion Mortgages Payable Land 500,000 520,000 55,000 100,000
b. Give the journal entry that Eagle recorded for the Equipment Trust Notes Rolling Stock 100,000 95,000 130,000 63,000
transfer of assets and accounts payable to Sand. Debentures Payable 1,000,000
Plant & Equipment 950,000 2,425,000 2,500,000
c. Give the journal entry that Sand recorded for receipt of Less: Discount on Debentures (40,000)
Less: Accumulated Depreciation (614,000)
the assets and accounts payable from Eagle. Total Liabilities Patents $1,697,200 $1,702,200 125,000 500,000
Special Licenses 95,800 100,000
Stockholders Equity
P1 43 Total Assets $3,027,300 $4,112,500
Common Stock ($5 par) 600,000
Bigtime Industries Inc. entered into a business
Additional Paid-In Capital from Common Stock 500,000
Additional Paid-In Capital from
Retirement of Preferred Stock 22,000
Retained Earnings 220,100
Less: Treasury Stock (1,500 shares) (12,000)
Total Liabilities & Equity $3,027,300
Immediately prior to the combination, Bigtimes common stock was selling for $14 per
share. Big- time incurred direct costs of $135,000 in arranging the business combination Required:
and $42,000 of costs associated with registering and issuing the common stock used in the a. Prepare any journal entry(ies) on Papers books related to the acquisition of Scissor
combination during 20X8 under equity method as well as cost method.
Required: b. Prepare a consolidation worksheet for 20X8 in good form
a. Identified the type of this business combination
b. Prepare all journal entries that Bigtime should have entered on its books to record the P2 26
The following trial balance summarizes the financial position and operations for Paper and
business combination
c. Present all journal entries that should have been entered on HCCs books to record the Scissor as of December 31, 20X9:
combination and the distribution of the stock received. Paper Company Scissor Company
Debit Credit Debit Credit
P2 25
Cash $232,000 $116,00
Paper Company acquired 100 percent of Scissor Companys outstanding common stock for
Accounts Receivable 165,000 0
97,000
$370,000 on January 1, 20X8, when the book value of Scissors net assets was equal to Inventory 193,000 115,000
$370,000. Paper uses the equity method to account for investments. Trial balance data for Investment in Scissor Stock 515,000 0
Paper and Scissor as of December 31, 20X8, are as follows: Land 250,000 125,000
Buildings & Equipment 875,000 250,000
Paper Company Scissor Company Cost of Goods Sold $278,000 $178,00
Depreciation Expense 65,000 0
12,000
Debit Credit Debit Credit
Selling & Administrative Expense 312,000 58,000
Cash $ 122,000 $ 46,000 Dividends Declared 90,000 30,000
Accounts Receivable 140,000 60,000
Inventory 190,000 120,000
Investment in Scissor Stock 438,000 0 Accumulated Depreciation $ 630,000 $ 48,000
Land 250,000 125,000 Accounts Payable 85,000 40,000
Buildings & Equipment 875,000 250,000 Bonds Payable 150,000 100,000
Cost of Goods Sold 250,000 155,000 Common Stock 625,000 250,000
Depreciation Expense 65,000 12,000 Retained Earnings 498,000 188,000
Selling & Administrative Expense 280,000 50,000 Sales 880,000 355,000
Dividends Declared 80,000 25,000 Income from Scissor 107,000 0
Accumulated Depreciation $ 565,000 $ 36,000 Total $2,975,000 $2,975,000 $981,000 $981,000
Accounts Payable 77,000 27,000
Bonds Payable 250,000 100,000
Common Stock 625,000 250,000 Required:
Retained Earnings 280,000 120,000 a. Prepare any equity method journal entry(ies) related to the investment in Scissor
Sales 800,000 310,000 Company during 20X9.
Income from Scissor 93,000 0 b. Prepare a consolidation worksheet for 20X9 in good form.
Total $2,690,000 $2,690,000 $843,000 $843,000