Assets Roland Downes $ 70,000 60,000 40,000 120,000 110,000 Other current assets . 50,000 120,000 100,000 300,000 430,000 Inventory Land.. Building (net) Equipment (net) Total assets. $1,000,000 $400,000 Liabilities and Equity Current liabilities . Common stock ($1 par). Paid-in capital in excess of par Retained earnings . $ 180,000 40,000 360,000 $ 60,000 20,000 180,000 420,000 $1,000,000 140,000 $400,000 Total liabilities and equity
On July 1, 2016, Roland Company exchanged 18,000 of its $45 fair value ($1 par value) shares for all the outstanding shares of Downes Company. Roland paid acquisition costs of $40,000. The two companies had the following balance sheets on July 1, 2016: (see attachment)
The following fair values applied to Downes’s assets:
Other current assets . . . . . . . . . . . $ 70,000
Inventory . . . . . . . . . . . . . . . . . . . 80,000
Land. . . . . . . . . . . . . . . . . . . . . . . 90,000
Building . . . . . . . . . . . . . . . . . . . . 150,000
Equipment . . . . . . . . . . . . . . . . . . 100,000
1. Record the investment in Downes Company and any other entry necessitated by the purchase.
2. Prepare the value analysis and the determination and distribution of excess schedule.
3. Prepare a consolidated balance sheet for July 1, 2016, immediately subsequent to the purchase.
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