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

question 51

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 net income for the year ended December 31,2010?

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Definitions:

Operating Cash Flow

A financial metric that indicates the amount of money generated by a company's business operations after accounting for operating expenses.

Net Working Capital

A measure of a company's short-term financial health and liquidity, calculated as current assets minus current liabilities.

Profit Margin

A financial metric expressing the ratio of a company's net income to its sales, demonstrating the percentage of revenue that exceeds the cost of goods sold.

Equivalent Annual Cost

A financial analysis approach to compare the cost-effectiveness of different assets with differing lifespans by calculating their annual costs.