Question

The separate condensed balance sheets of Patrick Corporation and its wholly owned subsidiary, Sean Corporation, are as follows: $ Sean 70,000 32,000 62,000 262,000 BALANCE SHEETS December 31, 2017 Patrick Cash 72,000 Accounts receivable (net) 140,000 Inventories 100,000 plant and equipment (net) 634,000 Investment in Sean 464,000 Total assets $ 1,410,000 Accounts payable 144,000 Long-term debt 112.000 Common stock ($10 par) 328,000 Additional paid-in capital Retained earnings 826,000 Total liabilities and shareholders $ 1,410,000 equity $426,000 96,000 34,000 68,000 14,000 214.000 $426,000 Additional Information • On December 31, 2017. Patrick acquired 100 percent of Sean's voting stock in exchange for $464,000 • At the acquisition date, the fair values of Sean's assets and liabilities equaled their carrying amounts, respectively. except that the fair value of certain items in Sean's Inventory were $26,000 more than their carrying amounts.

Answer 1

Calculation of Goodwill
Item		Value ($)
Cash		70,000
Accounts Receivable		32,000
Inventories (Book value + 26,000)		88,000
Plant & equipment		2,62,000
Total Assets (A)		4,52,000
Liabilities
Accounts payable		96,000
Long term payable		34,000
Total Liabilities (B)		1,30,000
Net Assets Acquired (C ) (A-B)		3,22,000
Cost of acquisition (D)		4,64,000
Goodwill (D-C)		1,42,000
The total assets to be reported in the consolidated balance sheet will be as under
Asset Item	Patrick ($)	Sean ($)	Consolidated ($)
Cash	72,000	70,000	1,42,000
Accounts Receivable	1,40,000	32,000	1,72,000
Inventories	1,00,000	88,000	1,88,000
Plant & equipment (net)	6,34,000	2,62,000	8,96,000
Goodwill			1,42,000
Total			15,40,000
So the answer is $1540000