On June 30, 2017, Wisconsin, Inc., issued $267,350 in debt and 18,400 new shares of its $10 par value stock to Badger Company owners in exchange for all of the outstanding shares of that company. Wisconsin shares had a fair value of $40 per share. Prior to the combination, the financial statements for Wisconsin and Badger for the six-month period ending June 30, 2017, were as follows: Wisconsin Badger Revenues $ (985,000 ) $ (339,000 ) Expenses 720,000 201,000 Net income $ (265,000 ) $ (138,000 ) Retained earnings, 1/1 $ (843,000 ) $ (208,000 ) Net income (265,000 ) (138,000 ) Dividends declared 106,250 0 Retained earnings, 6/30 $ (1,001,750 ) $ (346,000 ) Cash $ 110,750 $ 59,000 Receivables and inventory 433,000 180,000 Patented technology (net) 929,000 372,000 Equipment (net) 727,000 619,000 Total assets $ 2,199,750 $ 1,230,000 Liabilities $ (568,000 ) $ (414,000 ) Common stock (360,000 ) (200,000 ) Additional paid-in capital (270,000 ) (270,000 ) Retained earnings (1,001,750 ) (346,000 ) Total liabilities and equities $ (2,199,750 ) $ (1,230,000 ) Wisconsin also paid $30,800 to a broker for arranging the transaction. In addition, Wisconsin paid $43,100 in stock issuance costs. Badger’s equipment was actually worth $765,250, but its patented technology was valued at only $350,700. What are the consolidated balances for the following accounts? (Input all amounts as positive values)
ANSWER :-
Net income =265000(Wisconsin) - 30800 | 234,200 |
Retained earnings 1.1.17 | 843000 |
Patented technology =929000+350700 |
1,279,700 |
Goodwill (see working note below) |
|
Liabilities =568000+414000+267350(debt) |
1,249,350 |
Common stock =360000+(18400*10) |
544,000 |
Add: paid-in capital =27000+(18400*(40-10))-43100(issuance cost) |
535,900 |
Working note:Calculation of Goodwill |
|
Consideration transfered (Face value ) for Badger stock =(18400*40) +267350(debt) |
1,003,350 |
Less:Book value of Badger=1230000(total assets -414000(liabilities) |
816,000 |
Fair value in excess of book value |
187,350 |
Excess fair value (under valued equipment) =765250-619000 |
146,250 |
Excess fair value (over valued Patented technology) =372000-350700 |
(21,300) |
Goodwill =187350-146250-(-)21300 |
62,400 |
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On June 30, 2017, Wisconsin, Inc., issued $267,350 in debt and 18,400 new shares of its...
On June 30, 2017, Wisconsin, Inc., issued $267,350 in debt and 18,400 new shares of its $10 par value stock to Badger Company owners in exchange for all of the outstanding shares of that company. Wisconsin shares had a fair value of $40 per share. Prior to the combination, the financial statements for Wisconsin and Badger for the six-month period ending June 30, 2017, were as follows: Wisconsin Badger $ (339,000) Revenues $(985, 000) 720,000 201,000 $ 138,000) (208, 000)...
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On June 30, 2017, Wisconsin, Inc., issued $315,450 in debt and 18,100 new shares of its $10 par value stock to Badger Company owners in exchange for all of the outstanding shares of that company. Wisconsin shares had a fair value of $40 per share. Prior to the combination, the financial statements for Wisconsin and Badger for the six-month period ending June 30, 2017, were as follows: Wisconsin Badger Revenues $ (985,000 ) $ (462,000 ) Expenses 707,000 293,000 Net...
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