We can work on CONSOLIDATION AT THE END OF THE FIRST YEAR SUBSEQUENT TO DATE OF ACQUISITION

CONSOLIDATION AT THE END OF THE FIRST YEAR SUBSEQUENT TO DATE OF ACQUISITION (PURCHASE PRICE GREATER THAN BOOK VALUE)
Assume that a parent company acquires its subsidiary on 1/1/xx, by exchanging 41,500 shares of its $1 par value common stock, with a market value on acquisition date of $36 per share, for all of the outstanding voting shares of the subsidiary. You have been charged with preparing the consolidation of these two entities at 12/31/xx.

On acquisition date (1/1/xx), all of the subsidiary’s assets and liabilities had fair values equaling their book values except PPE assets are undervalued by $81,000 (depreciation =$5,400 per year), the subsidiary has an unrecorded patent with a fair value of $261,000 (amortization = $32,625 per year) and the parent records $162,000 of goodwill in the transaction.

Sample Solution

This theory has, however, received much criticism. Largely, the extent to which it is true, that having a small winning coalition is the most significant factor affecting the survival of non-democratic regimes, is dependent on how stable the regime appears to be, since “high political instability should reduce the effect of corruption, because actors have less incentive to bribe a government when it is unlikely to survive”[23], meaning the loyalty of the ruler’s winning coalition may become less effective. Thus, in reality, if a challenge to power did arise, the ruler may not be able to rely on his winning coalition if they were, in fact, more confident in the challenger overthrowing the incumbent, as in this circumstance it is highly likely that they would switch allegiances. Furthermore, Clark and Stone argue that Bueno de Mesquita et al.’s analysis “suffers from omitted variable analysis [which] can make the results appear stronger than they are. Once this error is corrected, the results are no longer interesting.”[24] This empirically undermines the foundations of the theory which Bueno de Mesquita et al. try to argue. To conclude, I would, however, argue that the economic factors are the most influential in determining why some non-democratic regimes survive longer than others. While there is one major anomaly, China, which accounts for “4 out of 5 people in the world that live in an autocracy”[27]>

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