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Advanced Accounting 11th Edition by Paul Fischer,William Tayler, Rita Cheng
Edition 11ISBN: 978-0538480284Advanced Accounting 11th Edition by Paul Fischer,William Tayler, Rita Cheng
Edition 11ISBN: 978-0538480284 Exercise 5
Par Company acquires 100% of the common stock of Sub Company for an agreedupon price of $900,000. The book value of the net assets is $700,000, which includes $50,000 of subsidiary cash equivalents. Existing fixed assets have fair values greater than their recorded book values. How will this transaction affect the cash flow statement of the consolidated firm in the period of the purchase, if:
a. Par Company pays $900,000 cash to purchase the stock?
b. Par Company pays $500,000 cash and signs 5-year notes for $400,000? All Sub Company shareholders receive notes.
c. Par Company exchanges only common stock with the shareholders of Sub Company?
a. Par Company pays $900,000 cash to purchase the stock?
b. Par Company pays $500,000 cash and signs 5-year notes for $400,000? All Sub Company shareholders receive notes.
c. Par Company exchanges only common stock with the shareholders of Sub Company?
Explanation
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b)Parent company pays $500,000 cash and ...
Advanced Accounting 11th Edition by Paul Fischer,William Tayler, Rita Cheng
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