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Assignment 3 11 6 Drey

The document shows the financial statements of Milk Co and Honey Co before a business combination where Milk Co acquired Honey Co. It provides the book values and fair values of Honey Co's assets and liabilities. It also shows the consideration transferred, goodwill calculation, and journal entries to record the acquisition. After the acquisition, a combined statement of financial position is presented for Milk Co.

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Abigail Bombales
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32 views4 pages

Assignment 3 11 6 Drey

The document shows the financial statements of Milk Co and Honey Co before a business combination where Milk Co acquired Honey Co. It provides the book values and fair values of Honey Co's assets and liabilities. It also shows the consideration transferred, goodwill calculation, and journal entries to record the acquisition. After the acquisition, a combined statement of financial position is presented for Milk Co.

Uploaded by

Abigail Bombales
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Milk Co Book Value

Cash 300,000
Receivables 160,000
Inventory 220,000
Land 100,000
Buildings (net) 400,000
Equipment (net) 120,000
Accounts Payable 160,000
Long-term Liabilities 380,000
Share Capital 400,000
Retained Earnings 360,000

Honey Co Total Assets


Cash 40,000
Receivables 80,000
Inventory 130,000
Land 60,000
Buildings (net) 140,000
Equipment (net) 50,000
Total Assets 500,000

FV of Net Assets (500k - 180k) 320,000

Consideration Transferred
Cash 200,000
Shares (10,000 shares x 18) 180,000
Total Consideration Transferred 380,000

Journal Entries
Cash 40,000
Receivables 80,000
Inventory 130,000
Land 60,000
Buildings (net) 140,000
Equipment (net) 50,000
Goodwill 60,000
Accounts Payable
Long-term Liabilities
Share Capital (100k x 10)
Share Premium (180k - 100k)
Cash
(To record the purchase of net assets)
Acquisition Expense 10,000
Cash
(to record the acquisition-related expense)

Share Premium 6,000


Cash
(to record the share issue cost)

Milk Company
Statement of Financial Position
December 31, 2016
Cash
Receivables
Inventory
Land
Buildings (net)
Equipment (net)
Goodwill
Total Assets

Accounts Payable
Long-term Liabilities
Share Capital [400,000 + (10,000 shares x 10 par)]
APIC (10,000 x 8) - 6,000
Retained Earnings
Total Liabilities and Shareholders' Equity
Honey Co Book Value Honey Co Fair Value
40,000 40,000
90,000 80,000
130,000 130,000
60,000 60,000
110,000 140,000
50,000 50,000
30,000 30,000
170,000 150,000
40,000
240,000

Honey Co Total Liabilities


Accounts Payable 30,000
Long-term Liabilities 150,000
Total Liabilities 180,000

Computation of Goodwill
Consideration Transferred 380,000
Less: FV of Net Assets 320,000
Goodwill 60,000

es

30,000
150,000
100,000
80,000
200,000
of net assets)
10,000
related expense)

6,000
ssue cost)

ny
al Position
016
134,000
240,000
350,000
160,000
540,000
170,000
60,000
1,654,000

190,000
530,000
500,000
74,000
360,000
1,654,000

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