KELOMPOK 1

Abdurrahman Rabbani F1319001

Allpacino Desella A.P F1319002
Gerard R. Lenama F1319024

EXERCISES

E1-1

1 a
2 b
3 a
4 d

E1-2

1 a
Plant and equipment should be recorded at the $220,000 fair value.

2 c
Investment cost $1,600,000

Less: Fair value of net assets

Cash $ 160,000
Inventory 380,000
Property and equipment— net 1,120,000
Liabilities (360,000) 1,300,000
Goodwill $ 300,000

E1-3

Stockholders’ equity— Pal Corporation on January 2

Capital stock, $10 par, 600,000 shares outstanding $ 6,000,000

Other paid-in capital

[$400,000 + $3,000,000 – $10,000] 3,390,000

Retained earnings[$1,200,000 - $20,000] 1,180,000

Total stockholders’ equity $10,570,000

Entry to record combination

Investment in Sip 6,000,000
Capital stock, $10 par 3,000,000
Other paid-in capital 3,000,000

Investment expense 20,000

Other paid-in capital 10,000
Cash 30,000
Check: Net assets per books(book value) $ 7,600,000
Goodwill and write-up assets 3,000,000
Less: Expense of direct costs (20,000)
Less: Issuance of stock (10,000)
$10,570,000

E1-5

Journal entries on the books of Pan Corporation to record merger with Sis
Corporation
Investment in Sis 1,060,000
Common stock, $10 par 360,000
Additional paid-in capital 300,000
Cash 400,000
To record issuance of 36,000 common shares and payment of cash in the
acquisition of Sis Corporation in a merger.

P1-3

Par issues 25,000 shares of stock for Sin’s outstanding shares

1a Investment in Sin 1,500,000

Capital stock, $10 par 250,000
Additional paid-in capital 1,250,000
To record issuance of 25,000, $ 10 par shares with a market price
of $60 per share in a business combination with Sin.
Investment expenses 60,000
Additional paid-in capital 40,000
Cash 100,000
To record costs of combination in a business combination with Sin.
Cash 20,000
Inventories 120,000
Other current assets 200,000
Land 200,000
Plant and equipment— net 700,000
Goodwill 360,000
Liabilities 100,000
Investment in Sin 1,500,000

To assign investment cost to identifiable assets and liabilities according to their fair values and
the remainder to goodwill. Goodwill is computed: $1,500,000 cost - $1,140,000 fair value of
net assets acquired.
 1b Par Corporation
Balance Sheet
January 2, 2011
(after business combination)

Assets
Cash [$240,00 + $20,000 - $100,000] $ 160,000
Inventories [$100,000 + $120,000] 220,000
Other current assets [$200,000 + $200,000] 400,000
Land [$160,000 + $200,000] 360,000
Plant and equipment — net [$1,300,000 + $700,000] 2,000,000
Goodwill 360,000
Total assets $ 3,500,000
Liabilities and Stockholders’ Equity
Liabilities [$400,000 + $100,000] $ 500,000
Capital stock, $10 par [$1,000,000 + $250,000] 1,250,000
Additional paid-in capital
[$400,000 + $1,250,000 -$40,000] 1,610,000
Retained earnings (subtract $60,000 direct costs) 140,000
Total liabilities and stockholders’ equity $ 3,500,000

P1-3 (lanjutan)

Par issues 15,000 shares of stock for Sin’s outstanding shares

2a Investment in Sin (15,000 shares $60) 900,000

Capital stock, $10 par 150,000
Additional paid-in capital 750,000
To record issuance of 15,000, $10 par common shares with a market
price of $60 per share.
Investment expense 60,000
Additional paid-in capital 40,000
Cash 100,000
To record costs of combination in the acquisition of Sin.
Cash 20,000
Inventories 120,000
Other current assets 200,000
Land 200,000
Plant and equipment— net 700,000
Liabilities 100,000
Investment in Sin 900,000
Gain on bargain purchase 240,000

To record Sin’s net assets at fair values and gain on bargain purchase.

Fair value of net assets acquired $1,140,000

Investment cost (Fair value of consideration) 900,000
Gain on Bargain Purchase $ 240,000
 2b Par Corporation
Balance Sheet
January 2, 2011
(after business combination)
Asset
Cash [$240,000 + $20,000 - $100,000] $ 160,000
Inventories [$100,000 + $120,000] 220,000
Other current assets [$200,000 + $200,000] 400,000
Land [$160,000 + $200,000] 360,000
Plant and equipment — net [$1,300,000 + $700,000] 2,000,000
Total assets $ 3,140,000

Liabilities and Stockholders’ Equity

Liabilities [$400,000 + $100,000] $ 500,000
Capital stock, $10 par [$1,000,000 + $150,000] 1,150,000
Additional paid-in capital
[$400,000 + $750,000 -$40,000] 1,110,000
Retained earnings (subtract $60,000 direct costs
And add $240,000 gain from bargain purchase) 380,000
Total liabilities and stockholders’ equity $ 3,140,000

Jawaban P1-5
1 Journal entries to record the acquisition of Saw Corporation

Investment in Saw 5,000,000

Capital stock, $10 par 1,000,000
Other paid-in capital 3,000,000
Cash 1,000,000
To record acquisition o f Saw for 100,000 shares of common stock
and $1,000,000 cash.
Investment expense 200,000
Other paid-in capital 100,000
Cash 300,000
To record payment of costs to register and issue the shares of stock
($100,000) and other costs of combination ($200,000).
Cash 480,000
Accounts receivable 720,000
Notes receivable 600,000
Inventories 1,000,000
Other current assets 400,000
Land 400,000
Buildings 2,400,000
Equipment 1,200,000
Accounts payable 600,000
Mortgage payable, 10% 1,200,000
Investment in Saw 5,000,000
Gain on bargain purchase 200,000
To record the net assets of Saw at fair value and gain on bargain purchase.

Gain on Bargain Purchase Calculation

Acquisition price $5,000,000
Fair value of net assets acquired 5,400,000
Gain on bargain purchase $ 400,000
 Solution P1-5 (continued)

2 Pat Corporation
Balance Sheet
at January 2, 2011
(after business combination)

Assets
Current Assets
Cash $ 5,180,000
Accounts receivable— net 3,320,000
Notes receivable— net 3,600,000
Inventories 6,000,000
Other current assets 1,800,000 $ 19,900,000

Plant Assets
Land $ 4,400,000
Buildings— net 20,400,000
Equipment— net 21,200,000 46,000,000
Total assets $65,900,000

Liabilities and Stockholders’ Equity

Liabilities
Accounts payable $ 2,600,000
Mortgage payable, 10% 11,200,000 $13,800,000

Stockholders’ Equity
Capital stock, $10 par $21,000,000
Other paid-in capital 18,900,000
Retained earnings* 12,200,000 52,100,000
Total liabilities and stockholders’ equity $65,900,000

* Subtract $200,000 direct combination costs and add $400,000 gain on bargain purchase.