REFERENCE: Ref.03_14 Jaynes Inc.obtained All of Aaron Co.'s Common Stock on January

question 121

Essay

REFERENCE: Ref.03_14
Jaynes Inc.obtained all of Aaron Co.'s common stock on January 1,2009,by issuing 11,000 shares of $1 par value common stock.Jaynes' shares had a $17 per share fair value.On that date,Aaron reported a net book value of $120,000.However,its equipment (with a five-year remaining life)was undervalued by $6,000 in the company's accounting records.Any excess of consideration transferred over fair value of assets and liabilities is assigned to an unrecorded patent to be amortized over ten years.
SHAPE \* MERGEFORMAT

-If this combination is viewed as an acquisition,what was consolidated patents as of December 31,2010?

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Definitions:

Return On Assets

A financial ratio that indicates how profitable a company is relative to its total assets, measuring efficiency in generating profits.

Net Income

The net income of a business following the deduction of all costs, such as operational expenses and taxes, from its overall revenue.

Average Total Assets

An indicator of a company's financial health, calculated by adding the beginning and ending total assets for a period and dividing by two.

Managerial Accounting

The practice of identifying, measuring, analyzing, and interpreting accounting information to help managers make informed business decisions.