Question

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 income	$	(278,000	)		$	(169,000	)
Retained earnings, 1/1	$	(801,000	)		$	(236,000	)
Net income		(278,000	)			(169,000	)
Dividends declared		105,000				0
Retained earnings, 6/30	$	(974,000	)		$	(405,000	)
Cash	$	42,000			$	79,000
Receivables and inventory		413,000				216,000
Patented technology (net)		911,000				347,000
Equipment (net)		739,000				664,000
Total assets	$	2,105,000			$	1,306,000
Liabilities	$	(501,000	)		$	(431,000	)
Common stock		(360,000	)			(200,000	)
Additional paid-in capital		(270,000	)			(270,000	)
Retained earnings		(974,000	)			(405,000	)
Total liabilities and equities	$	(2,105,000	)		$	(1,306,000	)

Wisconsin also paid $39,700 to a broker for arranging the transaction. In addition, Wisconsin paid $41,600 in stock issuance costs. Badger’s equipment was actually worth $796,750, but its patented technology was valued at only $322,900.

What are the consolidated balances for the following accounts? (Input all amounts as positive values)

Accounts

a.Net income.

b.Retained earnings, 1/1/17

.c.Patented technology.

d.Goodwill.

e.Liabilities.

f.Common stock.

g.Additional paid-in capital.

Answer 1

CONSOLIDATED BALANCES:
Net income (278000-39700)	$238300
Retained earnings, 1/1	$801000
Patented technology (911000+322900)	$1233900
Goodwill (computed above)	$273100
Liabilities (501000+431000+315450)	$1247450
Common stock (360000+(18100*10))	$541000
Additional Paid‑in Capital (270000+(18100*30)-41600)	$771400

Allocation of Acquisition-Date Excess Fair Value:
Consideration transferred (fair value) for Badger Stock (315450+(18100*40))	1039450
Book Value of Badger, 6/30 (200000+270000+405000)	875000
Fair Value in Excess of Book Value	164450
Excess fair value (undervalued equipment) (796750-664000)	132750
Excess fair value (overvalued patented technology) (322900-347000)	(24100)
Goodwill	$273100