Practice 2a Name:

You are the accountant of A Corp. and were assigned to assess B Co. The following data
are available for B corp.
Accounts payable 1000 The owner of A Corp wanted to purchase B Co.
Accounts receivable—net 720 Your assignment is to negotiate the purchase price
Accum. Depr Build -300 between 90%-110% fair value of the B Co.
Accum. Depr Equipment -400 Your findings showed that all assets' and liabilities'
Building 1,500 book value and fair value are equal, except for
Capital stock, $10 par 2,000 Building 2500, Equipment 1300 and Land 400
Cash 500 Instructions:
Equipment 2,000 Construct the proper financial statement of B Co.
Inventories 840 Calculate the book value of B Co.
Land 200 Calculate the fair value of B Co.
Mortgage payable—10% 1,400 Calculate the suggested purchased price
Notes receivable—net 1000 Prepare the journal entries for the purchase, if A Corp
Other current assets 340 paid 110% FV, issuing 100 common stock par 40,
Paid-in capital 1,200 MV 42 and cash.
Retained earnings 800 110% 100 40
42
ASSETS BV FV investment in B Co 5720
Cash 500 500 cash
Accounts receivable—net 720 720 common stock par 10
Notes receivable—net 1000 1000 paid in capital
Inventories 840 840
Land 200 400
Building 1,500 2500 Cash 500
Accum. Depr Build -300 Accounts receivable—net 720
Equipment 2,000 1300 Notes receivable—net 1000
Accum. Depr Equipment -400 Inventories 840
Other current assets 340 340 Land 400
TOTAL 6400 7600 Building 2500
LIABILTIES 0 Equipment 1,300
Mortgage payable—10% 1,400 1400 Other current assets 340
Accounts payable 1,000 1000 goodwill 520
TOTAL 2,400 2400 account payable
OWNERS' EQUITY Mortgage payable—10%
Paid-in capital 1,200 1200 investment in B Co
Retained earnings 800 800 8,120
Capital stock, $10 par 2,000 2000
total 4,000 5200
6,400
 Accounts payable 600
Accounts receivable—net 720
Accum. Depr Build 300
Accum. Depr Equipment 400
Building 1,500
Capital stock, $10 par 2,000
Cash 480
Equipment 2,000
Inventories 840
Land 200
Mortgage payable—10% 1,400
Notes receivable—net 600
Other current assets 360
Paid-in capital 1,200
Retained earnings 800

110 100 40
invest cost 5720 42
1520 fv 5200
4000 goodwill 520
200

1000
1,400
5720
8,120
Practice 2b
You are the accountant of A Corp. and were assigned to assess B Co. The following data
are available fro B corp.
Accounts payable
Accounts receivable—net
Accum. Depr Build
Accum. Depr Equipment
Building
Capital stock, $10 par
Cash
Equipment
Inventories
Land
Mortgage payable—10%
Notes receivable—net
Other current assets
Paid-in capital
Retained earnings
600 The owner of A Corp wanted to purchase B Co.
720 Your assignment is to negotiate the purchase price
300 between 90%-110% fair value of the B Co.
400 Your findings showed that all assets' and liabilities'
1,500 book value and fair value are equal, except for
2,000 Building 2500, Equipment 1300 and Land 400
480 Instructions:
2,000 Construct the proper financial statement of B Co.
840 Calculate the book value of B Co.
200 Calculate the fair value of B Co.
1,400 Calculate the sugessted purchased price
600 Prepare the journal entries for the purchase, if A Corp
360 paid 110% FV, issuing 100 common stock par 50,
1,200 MV 32 and cash.
800

ASSETS BV FV
Cash 480 Investment in B Co.
Accounts receivable—net 720 Paid in capital
Notes receivable—net 600 Commonstock
Inventories 840 Cash
Other current assets 360
Land 200
Building
Accum. Depr Build
Equipment
Accum. Depr Equipment
Total assets
LIABILTIES
Accounts payable
Mortgage payable—10%
Total Liabilities
OWNERS' EQUITY
Capital stock, $10 par
Paid-in capital
Retained earnings
Total O-Equity
Total Liabilities &Oequity

Suggested purchase price

Practice 2C
The followings is A Corp. financial position on the the day of B Co. was purchased
Cash $6,000 You are the accountant of A Corp. and were assigned to assess B Co. The following
Accounts receivable—net 2,600 data are available for B corp.
Notes receivable—net 3,000 Accounts payable 600 Your findings showed that all assets'
Inventories 5,000 Accounts receivable—net 720 and liabilities' book value and fair value
Other current assets 1,400 Accum. Depr Build -300 are equal, except for Building 2500,
Land 4,000 Accum. Depr Equipment -400 Equipment 1300 and Land 400
Buildings—net 18,000 Building 1,500 FV of Subs.Co. 5,200
Equipment—net 20,000 Capital stock, $10 par 2,000 Price paid 92%*5200 4784
Total assets $60,000 Cash 480 Bargain purchase gain 416
Accounts payable $2,000 Equipment 2,000
Mortgage payable—10% 10,000 Inventories 840 Investment Subs.Co ###
Capital stock, $10 par 20,000 Land 200 Cash ###
Paid-in capital 16,000 Mortgage payable—10% 1,400
Retained earnings 12,000 Notes receivable—net 600
Total liabilities & equities $60,000 Other current assets 360
Paid-in capital 1,200
Instructions: Retained earnings 800
Prepare the balance sheet of AB Corp. after B had been acquired at 92% Fair value

ASSETS LIABILITIES
Cash $1,696 Accounts payable $2,600
Accounts receivable—net 3,320 Mortgage payable—10% 11,400
Notes receivable—net 3,600
Inventories 5,840 Total liabilities $14,000
Other current assets 1,760 OWNERS'EQUITY
Land 4,400 Capital stock, $10 par 20,000
Buildings—net 20,500 Paid-in capital 16,000
Equipment—net 21,300 Retained earnings 12,416

Total equities 48,416

Total assets $62,416 Total liabilities & equities $62,416
Practice 2D

The followings is A Corp. financial position on the the day of B Co. was purchased
Cash $6,000 You are the accountant of A Corp. and were assigned to assess B Co. The following
Accounts receivable—net 2,600 data are available for B corp.
Notes receivable—net 3,000 Accounts payable 600 Your findings showed that all assets'
Inventories 5,000 Accounts receivable—net 720 and liabilities' book value and fair value
Other current assets 1,400 Accum. Depr Build -300 are equal, except for Building 2000,
Land 4,000 Accum. Depr Equipment -400 Equipment 1000 and Land 500
Buildings—net 18,000 Building 1,500
Equipment—net 20,000 Capital stock, $10 par 2,000
Total assets $60,000 Cash 480
Accounts payable $2,000 Equipment 2,000
Mortgage payable—10% 10,000 Inventories 840
Capital stock, $10 par 20,000 Land 200
Paid-in capital 16,000 Mortgage payable—10% 1,400
Retained earnings 12,000 Notes receivable—net 600
Total liabilities & equities $60,000 Other current assets 360
Paid-in capital 1,200
Instructions: Retained earnings 800
Prepare the balance sheet of AB Corp. after B had been acquired at 95% Fair value

ASSETS LIABILITIES
Practice 2e
The followings is A Corp. financial position on the the day of B Co. was purchased
Cash $6,000 You are the accountant of A Corp. and were assigned to assess B Co. The following data
Accounts receivable—net 2,600 are available for B corp.
Notes receivable—net 3,000 Accounts payable 600 The owner of A Corp wanted to purchase B Co.
Inventories 5,000 Accounts receivable—net 720 Your assignment is to negotiate the purchase price
Other current assets 1,400 Accum. Depr Build -300 between 90%-110% fair value of the B Co.
Land 4,000 Accum. Depr Equipment -400 Your findings showed that all assets' and liabilities'
Buildings—net 18,000 Building 1,500 book value and fair value are equal, except for
Equipment—net 20,000 Capital stock, $10 par 2,000 Building 2500, Equipment 1300 and Land 400
Total assets $60,000 Cash 480
Accounts payable $2,000 Equipment 2,000
Mortgage payable—10% 10,000 Inventories 840
Capital stock, $10 par 20,000 Land 200
Paid-in capital 16,000 Mortgage payable—10% 1,400
Retained earnings 12,000 Notes receivable—net 600
Total liabilities & equities $60,000 Other current assets 360
Paid-in capital 1,200
Instructions: Retained earnings 800
1. Prepare a schedule to show how the investment cost is allocated to identifiable assets and liabilities.
2. Prepare the journal entries for the purchase, if A Corp paid the acquisition by issuing 100 common stock par 40, MV 42 and cash.
3. Prepare the balance sheet of AB Corp. after B had been acquired : a. At 90% Fair value; b. At 110% Fair value
Practice 2a Name:

You are the accountant of A Corp. and were assigned to assess B Co. The following data
are available for B corp.
Accounts payable 600 The owner of A Corp wanted to purchase B Co.
Accounts receivable—net 720 Your assignment is to negotiate the purchase price
Accum. Depr Build 300 between 90%-110% fair value of the B Co.
Accum. Depr Equipment 400 Your findings showed that all assets' and liabilities'
Building 1,500 book value and fair value are equal, except for
Capital stock, $10 par 2,000 Building 2500, Equipment 1300 and Land 400
Cash 480 Instructions:
Equipment 2,000 Construct the proper financial statement of B Co.
Inventories 840 Calculate the book value of B Co.
Land 200 Calculate the fair value of B Co.
Mortgage payable—10% 1,400 Calculate the suggested purchased price
Notes receivable—net 600 Prepare the journal entries for the purchase, if A Corp
Other current assets 360 paid 110% FV, issuing 100 common stock par 40,
Paid-in capital 1,200 MV 42 and cash.
Retained earnings 800 110% 100 50 32

ASSETS BV FV investment in B Co 5720

Cash 480 480 paid in capital 1800
Accounts receivable—net 720 720 common stock par 10
Notes receivable—net 600 600 cash
Inventories 840 840
Land 200 400
Building 1,500 2500 Cash 480
Accum. Depr Build 300 Accounts receivable—net 720
Equipment 2,000 1300 Notes receivable—net 600
Accum. Depr Equipment 400 Inventories 840
Other current assets 360 360 Land 400
TOTAL 7400 7200 Building 2500
LIABILTIES 0 Equipment 1,300
Mortgage payable—10% 1,400 1400 Other current assets 360
Accounts payable 600 600 goodwill 520
TOTAL 2,000 2000 account payable
OWNERS' EQUITY Mortgage payable—10%
Paid-in capital 1,200 1200 investment in B Co
Retained earnings 800 800 7,720
Capital stock, $10 par 2,000 2000
total 4,000 5200
6,000
 Accounts payable 600
Accounts receivable—net 720 The owner of A Corp wanted to purchase B Co.
Accum. Depr Build 300 Your assignment is to negotiate the purchase price
Accum. Depr Equipment 400 between 90%-110% fair value of the B Co.
Building 1,500 Your findings showed that all assets' and liabilities'
Capital stock, $10 par 2,000 book value and fair value are equal, except for
Cash 480 Building 2500, Equipment 1300 and Land 400
Equipment 2,000 Instructions:
Inventories 840 Construct the proper financial statement of B Co.
Land 200 Calculate the book value of B Co.
Mortgage payable—10% 1,400 Calculate the fair value of B Co.
Notes receivable—net 600 Calculate the sugessted purchased price
Other current assets 360 Prepare the journal entries for the purchase, if A Corp
Paid-in capital 1,200 paid 110% FV, issuing 100 common stock par 50,
Retained earnings 800 MV 32 and cash.

invest cost 5720

fv 5200
5000 goodwill 520
2520

600
1,400
5720
7,720
 d to purchase B Co.
tiate the purchase price
ue of the B Co.
ll assets' and liabilities'
e equal, except for
300 and Land 400

ancial statement of B Co.

purchased price
es for the purchase, if A Corp
0 common stock par 50,