Question

2-1

Condensed balance sheets for Phillips Company and Solina Company on January 1, 2013, are as follows:

		Phillips		Solina
Current assets		$171,610		$81,840
Plant and equipment (net)		441,500		144,220
Total assets		$613,110		$226,060
Total liabilities		$98,070		$35,990
Common stock, $10 par value		327,300		167,910
Other contributed capital		116,550		50,110
Retained earnings (deficit)		71,190		(27,950	)
Total liabilities and equities		$613,110		$226,060

On January 1, 2013, the stockholders of Phillips and Solina agreed to a consolidation. Because FASB requires that one party be recognized as the acquirer and the other as the acquiree, it was agreed that Phillips was acquiring Solina. Phillips agreed to issue 20,270 shares of its $10 par stock to acquire all the net assets of Solina at a time when the fair value of Phillips’ common stock was $15 per share.

On the date of consolidation, the fair values of Solina’s current assets and liabilities were equal to their book values. The fair value of plant and equipment was, however, $153,990. Phillips will incur $18,700 of direct acquisition costs and $6,110 in stock issue costs.

Prepare the journal entries on the books of Phillips to record the acquisition of Solina Company’s net assets. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Total liabilities and equities $613,110 $226,060 On January 1, 2013, the stockholders of Phillips and Solina agreed to a consolidation. Because agreed to issue 20,270 shares of its $10 par stock to acquire all the net assets of Solina at a ti On the date of consolidation, the fair values of Solina's current assets and liabilities were equal $6,110 in stock issue costs. Prepare the journal entries on the books of Phillips to record the acquisition of Solina Company automatically indented when the amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit V (To record assets and liabilities acquired) (To record the direct acquisition costs) (To record the stock issue costs) LINK TO TEXT re to search 0 -

Answer 1

Books of Phillips Company Credit Debit 81,840 1,53,990 1,04,210 Account Titles and Explanation Current Assets Plant and Equipment Goodwill (Balancing Figure) Liabilities Common Stock (20,270 x 10) Other contributed capital (20,270 x 5) (To record acquisition of assets and liabilities) 35,990 2,02,700 1,01,350 18,700 Acquisition cost expense Cash (To record acquisition cost expense) 18,700 6,110 Other contribited capital Cash (To record stock issue expense) 6,110