Acquisition Question

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  • #2873352
    adaherro
    Participant

    Hey guys, i have a question i sort of made up. I remember seeing this question either on this forum or somewhere else, but i can’t locate it. I’m going to try to re-create.

    Company A acquires 100% of Company B by purchasing all of B’s stock by issuing 1000 shares of A’s stock.

    FMV of Company A’s Stock – $10 //// Par Value $1
    FMV of Company B’s Stock – $8 //// 1000 Shares

    What would be the entry?

    Thanks for the help, but for whatever reason, this is really bothering me that i can’t figure it out. I’m getting this entry, but it doesn’t seem right.

    Investment in B — $10,000
    Goodwill ————-2,000
    Common Stock A ————–1,000
    APIC ————————11,000

    Thanks in advance.

    AUD - 79
    BEC - 76
    FAR - 80
    REG - 75
    Ya boy is a CPA
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  • #2874273
    AndreA
    Participant

    Dr: Investment in B
    Cr: CS at par value
    Cr: APIC

    if less than 50%

    In order to record 100% acquisition you need to provide more information. My advice review the consolidation lessons. I believe in 2020 they changed how to record the Goodwill.

    FAR - 73, 78 (WileyCPAexcel 3,000+ MCQs, 50 SIMs)
    AUD - 73, 81 (WileyCPAexcel 3,000+ MCQs, 40 SIMs)
    BEC - 71, 71, 74, 84 (WileyCPAexcel 3,000+ MCQs, 10 SIMs)
    REG - 84 (WileyCPAexcel 2,000 MCQs, 15 SIMs)

    CA Ethics Exam - 94%

    NEVER GIVE UP.

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