Answered: Assets Liabilities and Equity $ 20,000…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Venus Company purchases 8,000 shares of Sundown Company for $64 per share. Just prior to the purchase, Sundown Company has the following balance sheet: (see attachment)

Venus Company believes that the inventory has a fair value of $400,000 and that the property plant, and equipment is worth $500,000.
1. Prepare the value analysis schedule and the determination and distribution of excess schedule.
2. Prepare the elimination entries that would be made on a consolidated worksheet prepared on the date of acquisition.

Assets
Liabilities and Equity
$ 20,000
280,000
400,000
100,000
Current liabilities.
Common stock ($5 par).
Paid-in capital in excess of par
Retained earnings .
Total liabilities and equity
Cash
$250,000
Inventory
Property, plant, and equipment (net) .
Goodwill
50,000
130,000
370,000
Total assets.
$800,000
$800,000

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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