Acquisition Method problem

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  • December 26, 2012 at 2:03 am #175426
    se7en.14
    Participant

    Hi all,

    I have trouble understanding the problem in Becker FAR page F3-38 in 2011/2012 editions.

    Column 1: FV of sub- how did they get $500,000? is it excluding marketable sec?

    How did they get $50k for B/S adjusted FV?

    what’s Premium 1,2 and discount?

    is this problem linked to another one? because im confused where they got all this….

    Thanks

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  • December 26, 2012 at 3:14 am #391590
    Jobless2CPA
    Member

    Those are just scenarios. He's assuming that the selling price, which is the fair value of the investment, are 500000 and 425000 respectively for the first 2 scenarios. In the third case, he's assuming that the guy bought the investment for just 10000 dollars, a huge bargain.

    December 26, 2012 at 3:16 am #391591
    Jobless2CPA
    Member

    The noncurrent asset goes up 50000 in value. There's your balance sheet adjustment.

    December 29, 2012 at 5:59 pm #391592
    se7en.14
    Participant

    thanks!!

    Page F3-42-43 example

    page 43 is similar to page 42 example, except its 100% investment ?

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