FINAL TEST 2nd SEM ADVANCE ACCOUNTING II Instructor: R.

Doloksaribu, MBA

I. Multiple Choice

II. CASE

During 2014 to 2016 Oxborn Co expanding its operation. On January 1, 2014 Oxborn Co acquired all net
Assets of Vico Co and Vico was dissolved and July 1, 2015 through Purchase its shares from existing
Stockholders of Levis Co 200 of 1,000 outstanding shares. In 2016 Oxborn acquired 80% of Lombard Co.
Here are the Balance sheets Listed bellow:(in millions rupiahs)

Jan.1, 2014 Jan.1, 2014 Jan.1, 2015 Jan.1, 2016

Oxborn Co Vico Co Levis Co Lombard Co
Book V Fair V Book V Fair V Book V Fair V
Cash 1,000,000 500,000 500,000 250,000 250,000 150,000 150,000
Receivable-net 800,000 200,000 200,000 150,000 150,000 100,000 100,000
Inventories 1,500,000 200,000 220,000 100,000 120,000 500,000 500,000
Land 2,000,000 300,000 550,000 300,000 300,000 300,000 300,000
Buildings-net 1,000,000 500,000 550,000 400,000 410,000 200,000 220,000
Equipment-net 500,000 300,000 280,000 100,000 120,000 200,000 230,000
Total Assets 6,800,000 2,000,000 2,300,000 1,300,000 1,350,000 1,450,000 1,500,000

Equities
Notes Payable 500,000 100,000 150,000 200,000 210,000 150,000 170,000
Accts Payable 300,000 100,000 100,000 250,000 260,000 450,000 470,000
Bonds 800,000 100,000 180,000 150,000 150,000 150,000 150,000
Common stock:
par 1,000 4,000,000 -
par 100 1,500,000
par 200 200,000
par 100 500,000
Ret. Earnings 1,200,000 200,000 500,000 200,000
Total Equities 6,800,000 2,000,000 1,300,000 1,450,000

Here are the information related to Investment and acquisitions of Oxborn Co to the all companies above:
1. On January 1, 2014 Oxborn Co issued 2,000 shares with market price 1,500. In addition to that Oxborn Co
paid Cash Rps 400,000 in acquiring Vico Co and Vico Co dissolved on January 2, 2014. Oxborn paid Dirct
Cost for Consulting fee Rp 5,000 and Registering Cost Rp 5,000. Depreciation for Building and equipment
in 2014 5% and 10% respectively. Net income in 2014 Rps 350,000.

2. On January 1, 2015 the market price of Levis Co common stock Rp 100 and Sep. 1, Levis Co declared
dividends Rps 200,000 and Net income for the period 2015 Rp 500,000. At December 31, 2015 the
common stock price of Levis Co Rp 150 . Oxborn obtain Net income during 2015 Rp 450,000 include
Dividends Income from Levis Co.
Note:
- Depreciation of Oxborn Co year 2015 using Straight line equals to year 2014.
- Oxborn Co is stated only temporary Controlling interest in Levis Co.

3. In 2016 Oxborn continue to expand its operation by purchase Lombards Net Asset 80% Rp 640,000 Cash.
These the separate Income statement of Oxborn Co and Lombard Co:
 Oxborn Co Lombard Co
Sales 3,500,000 900,000
Cost of Sales 1,500,000 400,000
Gross Profit 2,000,000 500,000
Expenses 550,000 200,000
Net Income 1,450,000 300,000

All Sales to other companies paid by cash except intercompany transaction between Oxborn Co as a
parent with Lombard Co as subsidiaries recorded on account. And Lombard Co strictly be allowed to
purchase inventory from Oxborn Co. And during 2016 Oxborn Co sold inventory to Lombard Co Rps
400,000 with mark-up 30%, and still remain unsold inventory Rps 150,000.- Dividends declared on July
2016 by Lombard Co Rp 150,000 and Cash Remittance still outstanding on December 31, 2016.
- Depreciation Expense year 2016 of Oxborn Co using straight line equals to year 2014.
- The Excess of Cost over Book Value amortized : For Building 10 yrs, Equipment 5 yrs And Notes
Payable/Acct Payable 1 yrs.
- Common Stock Market Price of Levis Co on Dec. 31, 2016 Equals to year end 2015.

Instructions:

1. Prepare all journal entries needed every year which are related with Business combination and
acquisition.
a. In year 2014
b. In year 2015
c. In year 2016
2. Prepare Balance sheet at the end of:
a. Year 2014.
b. Year 2015.
c. Year 2016. (Worksheet include Income Statement, Retained Earning & Balance Sheet for
Consolidated Statement). Make 7 steps Adjustment/Eliminations Entries !.

3. Explain the result of Business Combination which is occurred from 2014 to 2016 by Oxborn Co!.
(10 points bonus)