Question

On June 30, 2017, Wisconsin, Inc., issued $147,900 in debt and 20,400 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	$	(930,000	)		$	(331,000	)
Expenses		663,000				210,000
Net income	$	(267,000	)		$	(121,000	)
Retained earnings, 1/1	$	(809,000	)		$	(216,000	)
Net income		(267,000	)			(121,000	)
Dividends declared		114,250				0
Retained earnings, 6/30	$	(961,750	)		$	(337,000	)
Cash	$	69,750			$	118,000
Receivables and inventory		461,000				194,000
Patented technology (net)		911,000				321,000
Equipment (net)		720,000				650,000
Total assets	$	2,161,750			$	1,283,000
Liabilities	$	(570,000	)		$	(476,000	)
Common stock		(360,000	)			(200,000	)
Additional paid-in capital		(270,000	)			(270,000	)
Retained earnings		(961,750	)			(337,000	)
Total liabilities and equities	$	(2,161,750	)		$	(1,283,000	)

Wisconsin also paid $32,300 to a broker for arranging the transaction. In addition, Wisconsin paid $44,700 in stock issuance costs. Badger’s equipment was actually worth $768,500, but its patented technology was valued at only $300,800.

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

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

urchase Cost & Badgers - Book value of acquisita Answer: B) calculation of Net Income : - Net Income = Revenue (Expenses + Brokerage) = $930,000-($663.000 + $ 32,900) = $930,000-$695300 :. Nel- Income = $234,700 b) Relained earnings it/17 = $ 809,000 ed earnings of subsidiary pre-acquisition will not form the past of the consolidated not income] c) patented Technology = Book value of parent + Fair vale t subsidiary. =$911,000+ $300,800 is patented Technology = $1,211,800 d) Good will a purchase cost of Badger's - BO purchase eos - Debt issued + stock issued at fair value. = $147.900 +(20.400 x $40) purchased costa $ 963,900 Book value of acquisition - common stock + Retained earnings + Additional paid in capital - under valuation in patent + ovey valuation in equipment. = $200,000 + $ 337000 + $ 279000-$300,200 $1.156200 + $ 650,000 Goodwill - $963900 - $1,156,200. . Good will = (#192,300) e) Liabilities = Liabilites for both the companies + Additional liability issued. - $510,000+ $475,000 + $147900 : Liabilities = $1,193.900 common stock - Existima valere + Additional shares issued . at par value = $360.000 +(20,400 x $105 - $360,000 + $204,000 common stock = $564,000. |9) Additional paid in capital - Additional shares issued at fair value - Additional shaxes issued at par value -Issuane cost =20,400 ($40-$10))- $ 44,700 :. Additional paid in capital = $567300