Accounting Question

College of Administrative and Financial Sciences
Assignment (1)
Deadline: Saturday 01/03/2025 @ 23:59

Course Name: Advanced Financial Accounting

Student’s Name: SEU ELITE

Course Code: ACCT 302

Student’s ID Number:

Semester: II

CRN: 25831
Academic Year: 1446 (2024-2025)

For Instructor’s Use only
Instructor’s Name: Dr. Fathimunisa Hanfy
Students’ Grade:
/15

Level of Marks:

Instructions – PLEASE READ THEM CAREFULLY
•
•
•
•
•
•
•
•

Restricted – ‫مقيد‬

The Assignment must be submitted on Blackboard (WORD format only) via allocated
folder.
Assignments submitted through email will not be accepted.
Students are advised to make their work clear and well presented, marks may be reduced
for poor presentation. This includes filling your information on the cover page.
Students must mention question number clearly in their answer.
Late submission will NOT be accepted.
Avoid plagiarism, the work should be in your own words, copying from students or other
resources without proper referencing will result in ZERO marks. No exceptions.
All answered must be typed using Times New Roman (Size 12, Double-spaced) font. No
pictures containing text will be accepted and will be considered plagiarism).
Submissions without this cover page will NOT be accepted.

1. Zaid Ltd and Zafar Ltd agreed to merge on January 1, 2019. On the date of the merger
agreement, the companies reported the following data: (5 Marks)

Current Assets
Long Term Assets

Zaid Ltd
Book
Fair Value
Value
190,000
240,000
600,000
500,000

Zafar Ltd
Book
Fair Value
Value
50,000
62,000
300,000
275,000

Accumulated Depreciation
Total Assets

(130,000)
660,000

(50,000)
300,000

Current Liabilities
Common Stock
Capital in excess of Par Value
Retained Earnings
Total Liabilities

100,000
300,000
40,000
220,000
660,000

Balance Sheet

740,000
120,000

75,000
50,000
10,000
165,000
300,000

337,000
75,000

Zaid Ltd has 15,000 shares of its $20 par value shares outstanding on January 1, 20X3, and Zafar
Ltd has 10,000 shares of $5 par value stock outstanding. The market values of the shares are
$400 and $75, respectively.
Required:
Zaid Ltd issues 1,000 shares of stock in exchange for all of Zafar Ltd’s net assets. Prepare a
balance sheet for the combined entity immediately following the merger.

Solution:

Restricted – ‫مقيد‬

Zaid and Zafar Ltd
Combined balance sheet
January 1,20X3
Balance sheet
Current Assets
Long Term Assets

Book Value
Zaid ltd
190,000
600,000

Fair value
Zafar ltd
62,000
275,000

Combined
Balance sheet
252,000
875,000
(130,000)
138,000
1,135,000

Less: Accumulated Depreciation
Good will
Total Assets

(130,000)
660,000

337,000

Current Liabilities
Common Stock
Capital in excess of Par Value
Retained Earnings
Total Liabilities

100,000
300,000
40,000
220,000
660,000

75,000

Computation of Good will:
Consolidation price: 1000 * 400 = 400,000
Fair value of net assets acquired: 337000 – 75,000 = 262,000
Good will =400,000 – 262,000 =138,000

Capital in excess of par value: (1,000 *400) – (1,000 * 20) = 380,000
380,000 + 40,000 = 420,000

Restricted – ‫مقيد‬

175,000
320,000
420,000
220,000
1,135,000

2) Plant Inc. a calendar year reporting company acquired 80% of Seed Inc.’s outstanding common
stock for $ 484,000 on Dec. 31, 2018, when the fair value of Seed’s Net Assets was $ 568,000.
The following data summarize the fair value calculation:
(7 Marks )
Book Value Element
Common Stock
Retained Earnings

Amount $
150,000
135,000

Life Remaining

(9700)
48,000
96,000
40,000
108,700
568,000

2 Months
Indefinite
8 Years
5 Years
Indefinite

Balance Sheet
Cash
Account Receivable
Inventory
Investment in Seed Book Value
Excess Cost
Land
Building & Equipment
Accumulated Depreciation
Total Assets

Plant ($)
148,000
103,500
152,500

Seed ($)
47,000
118,000
126,000

228,000
226,400
168,000
400,000
-16,000
1,410,400

127,000
309,000
-102,000
625,000

Payable & Accruals
Long Term Assets
Common Stock
Retained Earnings
Total Liabilities & Equity

265,400
290,000
450,000
405,000
1,410,400

120,000
220,000
150,000
135,000
625,000

Under –Or-Over Valuation
Inventory
Land
Equipment
Covenant –Not-To Compete
Goodwill Element
Total Cost
Plant Inc. & Seed Inc.
Worksheet
As at Dec. 31, 2018

Restricted – ‫مقيد‬

You are required to
(a) Prepare an Analysis of the Investment Account Through Dec. 31, 2018. Show clearly Book
Value and Excess Value calculation by preparing tables.
(b) Prepare all consolidation (Elimination Entries) as of Dec. 31, 2018.
(c) Prepare a Consolidated Worksheet as at Dec. 31, 2018.

Solution:
•

B.V calculation

NCI 20%
Balance in 12-31-X8 285,000* 20%
57,000
• The basic elimination entry

Plant 80%
285,000* 80%
228,000

C.S
150,000

RE
135,000

DR CS 150,000
DR RE 135,000
CR investment in sub-228,000
CR NCI in sub-57,000
•

Excess Value calculation

Balance
12-31-X8

NCI 20%

283,000*.2
56,600

P 80%

283,000*.8
226,400

Seed under or over valuation of net assets
Inventory Land
equipmen covenant
t
(9,700)
48,000 96,000
40,000

• The excess value reconciliation entry
DR land 48,000
DR equipment 96,000
DR covenant 40,000
DR G.W 108,700
CR inventory 9,700
CR investment in sub-226,400
CR NCI in sub-56,600

Restricted – ‫مقيد‬

G. W
108,700

•

The accumulated depreciation elimination entry
DR Acc – depreciation 102,000
CR Land & equipment 102,000

•

Consolidation worksheet
Plant Inc. & Seed Inc.
Worksheet
As at Dec. 31, 2018

Balance Sheet
Cash
Account Receivable
Inventory
Investment in Seed Book Value
Excess Cost
Land
Building & Equipment
Accumulated Depreciation
Covenant
Good will
Total Assets

Plant ($)
148,000
103,500
152,500

Payable & Accruals
Long Term debt
Common Stock
Retained Earnings
NCI a net of sale
Total Liabilities & Equity

Restricted – ‫مقيد‬

Seed ($)
47,000
118,000
126,000

228,000
226,400
168,000
400,000
-16,000

127,000
309,000
-102,000

1,410,400

625,000

265,400
290,000
450,000
405,000

120,000
220,000
150,000
135,000

1,410,400

Elimination entry
DR
CR

9,700

Consolidated
195,000
221,500
268,800

228,000
226,400

625,000

48,000
96,000
102,000
40,000
108,700
394,700

566,100

343,000
703,000
(16,000)
40,000
108,700
1,864,000

113,600
113,600

385,400
510,000
450,000
405,000
113,600
1,864,000

102,000

150,000
135,000
285,000

3. Baskin Corporation pays $ 420,000 for Camlin Inc. and that the estimated FMV of
Assets, Liabilities and Equity are as follows:
(3 Mark)
Account Receivable
Inventory
PP & E
Total Assets

100,000
50,000
200,000
350,000

Liabilities

70,000

Retained Earnings

80,000

Common Stock

200,000

Liabilities & Equities

350,000

Determine the amount of Goodwill.

Solution:
•

Good will = acquisition price – FMV
To compute the FMV
Account Receivable
100,000
Inventory
50,000
PP & E
200,000
Liabilities

•

Restricted – ‫مقيد‬

FMV
G.W = 420,000 – 280,00 = 140,000

(70,000)
280,000

College of Administration and Finance Sciences

Assignment (1)
Deadline: Saturday 04/10/2025 @ 23:59

Course Name: Advanced Financial

Student’s Name:

Accounting
Course Code: ACCT 302

Student’s ID Number:

Semester: First Semester

CRN:
Academic Year: 1447 H (2025-2026)

For Instructor’s Use only
Instructor’s Name:
Students’ Grade:

/15

Level of Marks: High/Middle/Low

Instructions – PLEASE READ THEM CAREFULLY
•

The Assignment must be submitted on Blackboard (WORD format only) via allocated folder.

•

Assignments submitted through email will not be accepted.

•

Students are advised to make their work clear and well presented, marks may be reduced for
poor presentation. This includes filling your information on the cover page.

•

Students must mention question number clearly in their answer.

•

Late submission will NOT be accepted.

•

Avoid plagiarism, the work should be in your own words, copying from students or other
resources without proper referencing will result in ZERO marks. No exceptions.

•

All answers must be typed using Times New Roman (size 12, double-spaced) font. No
pictures containing text will be accepted and will be considered plagiarism.

•

Submissions without this cover page will NOT be accepted.

1
Restricted – ‫مقيد‬

College of Administration and Finance Sciences

Assignment Question(s):

(Marks 15)

1. Zaid Ltd and Zafar Ltd agreed to merge on January 1, 2024. On the date of the
merger agreement, the companies reported the following data: (6 Marks)

Current Assets
Long Term Assets

Zaid Ltd
Book
Fair Value
Value
190,000
240,000
600,000
500,000

Zafar Ltd
Book
Fair Value
Value
50,000
62,000
300,000
275,000

Accumulated Depreciation
Total Assets

(130,000)
660,000

(50,000)
300,000

Current Liabilities
Common Stock
Capital in excess of Par Value
Retained Earnings
Total Liabilities

100,000
300,000
40,000
220,000
660,000

Balance Sheet

740,000
120,000

75,000
50,000
10,000
165,000
300,000

337,000
75,000

Zaid Ltd has 15,000 shares of its $20 par value shares outstanding on January 1, 20X3,
and Zafar Ltd has 10,000 shares of $5 par value stock outstanding. The market values
of the shares are $400 and $75, respectively.
Required:
Zaid Ltd issues 1,000 shares of stock in exchange for all of Zafar Ltd’s net assets.
Prepare a balance sheet for the combined entity immediately following the merger.

Solution:

2
Restricted – ‫مقيد‬

College of Administration and Finance Sciences

2. From the Given information Calculate the Book Value and pass Elimination entry:
(6 Marks)
1) PQR Ltd owns 75% of STV Ltd.
2) STV Ltd ’s net income for 20X4 is SAR 250,000
3) PQR Ltd’s net income for 20X4 from its own separate operations is SAR
500,000.
4) STV Ltd’s declares dividends of SAR 36,000 during 20X4.
5) STV Ltd has 20,000 shares of $5 par stock outstanding that were originally
issued at $15 per share.
6) STV Ltd’s beginning balance in Retained Earnings for 20X4 is SAR 150,000
Answer:

Q.3 The following intercompany transactions occurred during the year: (3 Marks)
• Parent loaned $12500 to Sub. To keep things simple, assume that there is
no interest revenue or interest expense associated with this loan.
• Parent made a sale to Sub for $13000 cash. The inventory had originally
cost Parent $12220. Sub then sold that same inventory to an outsider for
$14000.
• Parent made a sale to Sub for $15000 cash. The inventory had originally
cost Parent $11280. Sub has not yet sold that same inventory to an
outsider. (Don’t forget equity method entry!)
Based on our “conceptual discussion,” what consolidation worksheet entries
would you make?
Solution:

3
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