1A). Toni Co. acquired Sam Inc. on December 31 2014, in an acquisition business

Question

1A). Toni Co. acquired Sam Inc. on December 31 2014, in an acquisition business combination transaction. Toni’s net income for the year was $1,400,000 (prior to the acquisition), while Sam had net income of $400,000 earned evenly during the year. Toni paid $100,000 in direct combination costs, $50,000 in indirect costs, and $30,000 in stock issue costs to effect the combination.

Required: What is consolidation net income for 2014?

1B). Assuming there are no acquisition costs, (direct, indirect or stock issuance) how would your answer change in 1A if the acquisition took place on June 30,2014? Choose the best answer and provide the dollar amount.

a.Toni’s income for the past year plus Sam’s income for the past six months. ________

b.Toni’s income for the past six months plus Sam’s income for the past six months. _______

c.Toni’s income for the past six months plus Sam’s income for the past year. _________

d.Toni’s income for the past year plus Sam’s income for the past year. __________

Explanation / Answer

1A). Toni Co. acquired Sam Inc. on December 31 2014, in an acquisition business combination transaction. Toni’s net income for the year was $1,400,000 (prior to the acquisition), while Sam had net income of $400,000 earned evenly during the year. Toni paid $100,000 in direct combination costs, $50,000 in indirect costs, and $30,000 in stock issue costs to effect the combination.

Required: Consolidated net income for 2014 =

Toni’s net income for the year= $1,400,000

Sam had net income = $400,000

- direct combination costs =  $100,000

-  indirect costs = $50,000

- stock issue costs = $30,000

Consolidated net income for 2014 = $1,620,000

1B). Assuming there are no acquisition costs, (direct, indirect or stock issuance) how would your answer change in 1A if the acquisition took place on June 30,2014, then the best answer in provide the dollar amount is d.Toni’s income for the past year plus Sam’s income for the past year.$ 18 lacs

a.Toni’s income for the past year plus Sam’s income for the past six months. $ 16 lacs

b.Toni’s income for the past six months plus Sam’s income for the past six months. $ 9 lacs

c.Toni’s income for the past six months plus Sam’s income for the past year.$11 lacs

d.Toni’s income for the past year plus Sam’s income for the past year.$ 18 lacs

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.