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1. Baskin Corporation pays $ 420,000 for Camlin Inc. and that the estimated FMV of Assets, Liabilities and Equity are as follows:       (1 Mark)

Account Receivable                 100,000

Inventory                                 50,000

PP & E                                     200,000

Total Assets                             350,000

          Liabilities                                 70,000

          Retained Earnings                    80,000

          Common Stock                        200,000

          Liabilities & Equities               350,000

          Determine the amount of Goodwill.

2.  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:  (2 Marks)

Balance Sheet	Zaid Ltd	Zafar Ltd
Book Value	Fair Value	Book Value	Fair Value
Current Assets	190,000	240,000	50,000	62,000
Long Term Assets	600,000	500,000	300,000	275,000
Accumulated Depreciation	(130,000)		(50,000)
Total Assets	660,000	740,000	300,000	337,000
Current Liabilities	100,000	120,000	75,000	75,000
Common Stock	300,000		50,000
Capital in excess of Par Value	40,000		10,000
Retained Earnings	220,000		165,000
Total Liabilities	660,000		300,000

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:     

3.   From the Given information Calculate the Book Value and pass Elimination entry:                                                                                               (2 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