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2. Consolidating Entries (35 points) Bates Corporation purchased 100% of the common stock of Johns Inc....
Pepper Company, which is a calendar-year-reporting company, purchased 100% of the common stock of Salt Inc....
Pepper Company, which is a calendar-year-reporting company, purchased 100% of the common stock of Salt Inc. for $325,000 on 12/31/15. Pepper declared dividends of $80,000 and Salt declared dividends of $10,000 during 2015. Each company's financial statements for the year ended 12/31/15 immediately after the acquisition are as follows: Income Statement (2015) Sales Cost of sales Expenses Net Income Pepper Co. (900,000) 500,000 260,000 (140,000) Salt Co. (500,000) 250,000 202,000 (48,000) 20,000 70,000 80,000 Balance Sheet (as of 12/31/15) Cash...
On December 31, 20X9, Add-On Company acquired 100 percent of Venus Corporation's common stock for $300,000....
On December 31, 20X9, Add-On Company acquired 100 percent of Venus Corporation's common stock for $300,000. Balance sheet information for Venus just prior to the acquisition is given here: Cash and Receivables $35,000 Inventory $75,000 Land $100,000 Buildings and Equipment (net) $220,000 Total Assets $430,000 Accounts Payable $65,000 Bonds Payable $150,000 Common Stock $100,000 Retained Earnings $115,000 Total Liabilities and Stockholders·Equity $430,000 At the date of the business combination, Venus's net assets and liabilities approximated fair value except for inventory,...
Pace Corporation acquired 100 percent of Spin Company's common stock on January 1, 20X9. Balance sheet...
Pace Corporation acquired 100 percent of Spin Company's common stock on January 1, 20X9. Balance sheet data for the two companies immediately following the acquisition follows: Item Pace Corporation Spin Company Cash $ 30,000 $ 25,000 Accounts Receivable 80,000 40,000 Inventory 150,000 55,000 Land 65,000 40,000 Buildings and Equipment 260,000 160,000 Less: Accumulated Depreciation (120,000 ) (50,000 ) Investment in Spin Company Stock 150,000 Total Assets $ 615,000 $ 270,000 Accounts Payable $45,000 $33,000 Taxes Payable 20,000 8,000 Bonds Payable...
7. Rangers, Inc. acquires all of the outstanding common stock of Slowly Industries for $450,000 cash....
7. Rangers, Inc. acquires all of the outstanding common stock of Slowly Industries for $450,000 cash. On the acquisition date, the subsidiary had Common Stock of $40,000 and Retained Earnings of $160,000. A patent unrecorded by Slowly was valued at $158,000. Required: a. Prepare the entry on Ranger's books to record the purchase. b. Prepare all necessary consolidation entries. 8. On January 2, 2020, Kuehler Corporation's stockholders' equity accounts were as follows: Common Stock, $1 par $100,000 Additional paid-in-capital 350,000...
Problem 2 Norton Corporation has agreed to acquire the net assets of Payco Corporation. Just prior...
Problem 2 Norton Corporation has agreed to acquire the net assets of Payco Corporation. Just prior to the acquisition, Payco's balance sheet was as follows: Payco Corporation Balance Sheet January 1, 20X1 Assets Liabilities and Equity $233,300 Accounts receivable............ $234,100 Inventory 78,900 Equipment (net). 90,250 Land 70,100 Buildings 29.900 Total assets.. $503 250 Current liabilities...........$ 69,100 Mortgage payable.......... 164,200 Stockholders' equity: Common stock ($10par) $122,700 Retained carnings...... 147.250 Total liabilities and equity 269.950 $503 250 Fair values of net assets...
Lucky’s Company acquires Waterview, Inc., by issuing 40,000 shares of $1 par common stock with a market price of $25 per share on the acquisition date and paying $125,000 cash
Lucky’s Company acquires Waterview, Inc., by issuing 40,000 shares of $1 par common stock with a market price of $25 per share on the acquisition date and paying $125,000 cash. The assets and liabilities on Waterview’s balance sheet were valued at fair values except equipment that was undervalued by $300,000. There was also an unrecorded patent valued at $40,000, as well as an unrecorded trademark valued at $75,000. In addition, the agreement provided for additional consideration, valued at $60,000, if...
On December 31, 2019, Purple Company purchased 80% of the common stock of Sage Company for...
On December 31, 2019, Purple Company purchased 80% of the common stock of Sage Company for $1,300,000. On this date, Sage had total owners' equity of $650,000 (common stock $100,000; other paid-in capital, $250,000; and retained earnings, $300,000). Any excess of cost over book value is due to the under or overvaluation of certain assets and liabilities. Assets and liabilities with differences in book and fair values are provided in the following table: Book Fair Value Value...
Consolidating entries (market value differs from book value) Assume that on January 1, 2013, an investor...
Consolidating entries (market value differs from book value) Assume that on January 1, 2013, an investor company acquired 100% of the outstanding voting common stock of an investee company. The following financial statement information was prepared immediately after the acquisition and presents the acquisition date balance sheet for the pre-consolidation investor company, the investee company and the consolidated financial statements for the investor and investee. Investor Investee Consolidated Cash & receivables $500,000 $62,500 $562,500 Inventory 375,000 156,250 531,250 Property &...
E3.3 Eliminating Entries, Revaluation of Reported Net Assets Petrel Corporation acquires all of the stock of Samson...
E3.3 Eliminating Entries, Revaluation of Reported Net Assets Petrel Corporation acquires all of the stock of Samson Company for $30 million in cash. Samson's balance sheet accounts at the date of acquisition are listed below. Date-of-acquisition fair values for Samson's assets and liabilities are also displayed. Samson has previously unreported developed technology valued at $6 million, meeting the criteria for capitalization per ASC Topic 805. (in thousands) Book Value Dr (Cr) Fair Value Dr (Cr) Cash........ Accounts receivable........................ Inventories ..........
On January 1, 2018, Marshall Company acquired 100 percent of the outstanding common stock of Tucker...
On January 1, 2018, Marshall Company acquired 100 percent of the outstanding common stock of Tucker Company. To acquire these shares, Marshall issued $318,000 in long-term liabilities and 20,000 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Marshall paid $25,000 to accountants, lawyers, and brokers for assistance in the acquisition and another $10,000 in connection with stock issuance costs. Prior to these transactions, the balance sheets for the...
Pepper Company, which is a calendar-year-reporting company, purchased 100% of the common stock of Salt Inc. for $325,000 on 12/31/15. Pepper declared dividends of $80,000 and Salt declared dividends of $10,000 during 2015. Each company's financial statements for the year ended 12/31/15 immediately after the acquisition are as follows: Income Statement (2015) Sales Cost of sales Expenses Net Income Pepper Co. (900,000) 500,000 260,000 (140,000) Salt Co. (500,000) 250,000 202,000 (48,000) 20,000 70,000 80,000 Balance Sheet (as of 12/31/15) Cash...
7. Rangers, Inc. acquires all of the outstanding common stock of Slowly Industries for $450,000 cash. On the acquisition date, the subsidiary had Common Stock of $40,000 and Retained Earnings of $160,000. A patent unrecorded by Slowly was valued at $158,000. Required: a. Prepare the entry on Ranger's books to record the purchase. b. Prepare all necessary consolidation entries. 8. On January 2, 2020, Kuehler Corporation's stockholders' equity accounts were as follows: Common Stock, $1 par $100,000 Additional paid-in-capital 350,000...
Problem 2 Norton Corporation has agreed to acquire the net assets of Payco Corporation. Just prior to the acquisition, Payco's balance sheet was as follows: Payco Corporation Balance Sheet January 1, 20X1 Assets Liabilities and Equity $233,300 Accounts receivable............ $234,100 Inventory 78,900 Equipment (net). 90,250 Land 70,100 Buildings 29.900 Total assets.. $503 250 Current liabilities...........$ 69,100 Mortgage payable.......... 164,200 Stockholders' equity: Common stock ($10par) $122,700 Retained carnings...... 147.250 Total liabilities and equity 269.950 $503 250 Fair values of net assets...
Consolidating entries (market value differs from book value) Assume that on January 1, 2013, an investor company acquired 100% of the outstanding voting common stock of an investee company. The following financial statement information was prepared immediately after the acquisition and presents the acquisition date balance sheet for the pre-consolidation investor company, the investee company and the consolidated financial statements for the investor and investee. Investor Investee Consolidated Cash & receivables $500,000 $62,500 $562,500 Inventory 375,000 156,250 531,250 Property &...
E3.3 Eliminating Entries, Revaluation of Reported Net Assets Petrel Corporation acquires all of the stock of Samson Company for $30 million in cash. Samson's balance sheet accounts at the date of acquisition are listed below. Date-of-acquisition fair values for Samson's assets and liabilities are also displayed. Samson has previously unreported developed technology valued at $6 million, meeting the criteria for capitalization per ASC Topic 805. (in thousands) Book Value Dr (Cr) Fair Value Dr (Cr) Cash........ Accounts receivable........................ Inventories ..........
On January 1, 2018, Marshall Company acquired 100 percent of the outstanding common stock of Tucker Company. To acquire these shares, Marshall issued $318,000 in long-term liabilities and 20,000 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Marshall paid $25,000 to accountants, lawyers, and brokers for assistance in the acquisition and another $10,000 in connection with stock issuance costs. Prior to these transactions, the balance sheets for the...
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