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3. On January 1, 2010 Hand acquires 100 % of Finger in a statutory merger. At acquisition date the following were the book values and fair values of fixed assets of these two companies: Book Value Fair Value Hand 900,000 800,000 300,000 200,000 Finger What is consolidated fixed assets under the acquisition method a b. What is consolidated fixed assets under the purchase method What is consolidated fixed assets under the pooling of interests method Davis acquires 100 % of Reynolds in an acquisition. At date of acquisition, Reynolds had in 4. process research and development costs they had spent $300,000 for 3 years ago and is now recorded on its books at $100,000 This R and D has not yet reached technological feasibility and no alternative use has been identified. At acquisition date, Reynolds continues to work on this project and the fair value is considered to be $200,000. How much will Davis recorded this for at acquisition date using the: a. Acquisition method b. Purchase method c. Pooling of interests method d Do either of answers a, b, c above differ is this transaction was structured as either a statutory merger or statutory consolidation. Holmes acquires 100 % of Watson in a transaction structured as an acquisition at January 1, 2010 5 for a payment as follows: Payment to Watson shareholders of $6 million cash, notes payable of $4 million due in 3 years at a market interest rate, and 100,000 shares of Holmes common stock with a $5 par and a $20 fair value. Under the acquisition method, how much is debited to Holmes Investment Account at a January 1, 2010. Under the purchase method, how much is debited to Holmes Investment Account at January b. 1, 2010 c. Under both methods how much is the consolidated Investment in Watson. On January 1, 2010 Adams pays $4 million cash to acquire 100 % of Baker in a transaction structured as an acquisition. At date of acquisition, Baker has book value of assets of $7 million 6 and book value of liabilities of $4 million. In addition Baker has land on its books with a book value of $800,000 and a fair value of $500,000. How much is consolidated goodwill. b. How does the answer to a. above differ if Adams paid $ 2 million C. Assume Adams pays $ 4 million cash and instead of Land, it is Note Payable that has the as above fair value and book value. How much is consolidated goodwill d. How does the answer to c. above differ if Adams paid $ 2 million. a 22 3. On January 1, 2010 Hand acquires 100 % of Finger in a statutory merger. At acquisition date the following were the book values and fair values of fixed assets of these two companies: Book Value Fair Value Hand 900,000 800,000 300,000 200,000 Finger What is consolidated fixed assets under the acquisition method a b. What is consolidated fixed assets under the purchase method What is consolidated fixed assets under the pooling of interests method Davis acquires 100 % of Reynolds in an acquisition. At date of acquisition, Reynolds had in 4. process research and development costs they had spent $300,000 for 3 years ago and is now recorded on its books at $100,000 This R and D has not yet reached technological feasibility and no alternative use has been identified. At acquisition date, Reynolds continues to work on this project and the fair value is considered to be $200,000. How much will Davis recorded this for at acquisition date using the: a. Acquisition method b. Purchase method c. Pooling of interests method d Do either of answers a, b, c above differ is this transaction was structured as either a statutory merger or statutory consolidation. Holmes acquires 100 % of Watson in a transaction structured as an acquisition at January 1, 2010 5 for a payment as follows: Payment to Watson shareholders of $6 million cash, notes payable of $4 million due in 3 years at a market interest rate, and 100,000 shares of Holmes common stock with a $5 par and a $20 fair value. Under the acquisition method, how much is debited to Holmes Investment Account at a January 1, 2010. Under the purchase method, how much is debited to Holmes Investment Account at January b. 1, 2010 c. Under both methods how much is the consolidated Investment in Watson. On January 1, 2010 Adams pays $4 million cash to acquire 100 % of Baker in a transaction structured as an acquisition. At date of acquisition, Baker has book value of assets of $7 million 6 and book value of liabilities of $4 million. In addition Baker has land on its books with a book value of $800,000 and a fair value of $500,000. How much is consolidated goodwill. b. How does the answer to a. above differ if Adams paid $ 2 million C. Assume Adams pays $ 4 million cash and instead of Land, it is Note Payable that has the as above fair value and book value. How much is consolidated goodwill d. How does the answer to c. above differ if Adams paid $ 2 million. a 22

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