Taya’s Cookie Store Corp. (TCS), a Canadian company that reports its financial statements in accordance with IFRS, acquired 100% of the net assets of Jaxxen’s Flour Shop Inc. (JFS) on December 31, 20X4, for $500,000 cash. JFS’s statement of financial position as at December 31, 20X4, is as follows: Jaxxen’s Flour Shop Inc. Statement of financial position
As at December 31, 20X4
(in ’000s)
Cash $ 24
Accounts receivable and accruals 64
Inventory 61
Land 190
Equipment (net) 200
Total assets $ 539
Accounts payable and accruals $ 19
Long-term debt 300
Common shares 100
Retained earnings 120
Total liabilities and equity $ 539
The fair value of JFS’s identifiable net assets at time of acquisition differed from its book value as indicated below (in $’000s):
Book value
Dec. 31, 20X4
Fair value
Dec. 31, 20X4
Est. remaining useful life/term to maturity Estimated residual value Inventory 61 66 N/A N/A Land 190 220 N/A N/A Equipment (net) 200 185 5 years $— Patent — 20 10 years $— Long-term debt 300 290 5 years N/A
Required:
a) Use the acquisition method to allocate the acquisition differential and determine goodwill arising on acquisition.
b) Prepare TCS’s journal entry to record the acquisition. Support the journal entry with a brief explanation as to its nature.
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answer loneliness;
What are the given options so i may
of the three mortgage options that demarco and tanya have to choose from, the balloon payment mortgage would be their best option, over adjustable payment and fixed payment plans.ultimately, the balloon payment plan would save demarco and tanya overall, in interest, would cost less monthly, and they would only have to make these payments for 8 years, opposing to 30 years for adjustable or fixed payment plans.
overall, demarco and tanya would save $80,811 if they chose balloon payments over fixed payments, and would save $116,711 if they choose balloon payments over adjustable payments. benefits with choosing fixed payments over adjustable payments is that, in the end, the payments will still be $836.30 a month, while with adjustable payments, the initial monthly payments will be $763.38 to $1082.70 a month, ultimately leading to a more costly purchase. benefits with choosing fixed payments over balloon payments are not present. benefits in choosing adjustable payments over is that it has a lower interest rate, and starts with lower monthly payments initially. benefits in choosing adjustable payments over balloon payments include a lower interest rate, and lower initial monthly payments. benefits in choosing balloon payments over fixed payments include lower interest rates, lower overall price, lower monthly payments, takes less time to pay off, and does not require a downpayment. benefits in choosing balloon payments over adjustable payments include, lower monthly payments (when averaged), takes less time to pay off, and lower overall price.
hence, option c, balloon payments, is the best option for demarco and tanya to make this purchase, for it will save them a minimum of $80811, and a maximum of $116,711.