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aying of its own common stock with a fair value of $40 per share. Parent paid legal and accounting fees of $21,800 as $6,100 in stock issuance costs. Following are preacquisition financial balances for Parent Company and Subsidiary Company as of December 31 the acquisition. Also included are fair values for Subsidiary Company accounts. Cash Receivables Inventory Land Building and equipment (net) Franchise agreements Accounts payable Parent Company Subsidiary Company Book ValuesBook Values Fair Values 12/31 12/31 12/31 $ 215,000 58,550 $58,550 258,750 376,000 376,000 532,500 252,000 309,400 767,500 136,000 114,700 780,000 282,000 342,900 245,000 240,000 279,400 (321,000) (173,000) (173,000) (140,000) (46,250) (46,250) (545,000) (545,000) Accrued expenses Longterm liabilities Common stock-$20 par value Common stock-$5 par value We (1,085,000) (660,000) (70.000 (210,000) 100.0001

aying of its own common stock with a fair value of $40 per share. Parent paid legal and accounting fees of $21,800 as $6,100 in stock issuance costs. Following are preacquisition financial balances for Parent Company and Subsidiary Company as of December 31 the acquisition. Also included are fair values for Subsidiary Company accounts. Cash Receivables Inventory Land Building and equipment (net) Franchise agreements Accounts payable Parent Company Subsidiary Company Book ValuesBook Values Fair Values 12/31 12/31 12/31 $ 215,000 58,550 $58,550 258,750 376,000 376,000 532,500 252,000 309,400 767,500 136,000 114,700 780,000 282,000 342,900 245,000 240,000 279,400 (321,000) (173,000) (173,000) (140,000) (46,250) (46,250) (545,000) (545,000) Accrued expenses Longterm liabilities Common stock-$20 par value Common stock-$5 par value We (1,085,000) (660,000) (70.000 (210,000) 100.0001

FINANCIAL ACCOUNTING
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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Aa.14.

 

On December 31, Parent acquires Subsidiary's outstanding stock by paying $188,000 in cash and issuing 15,500 shares of its own common stock with a fair value of $40 per share. Parent paid legal and accounting fees of $21,800 as well as $6,100 in stock issuance costs. Following are preacquisition financial balances for Parent Company and Subsidiary Company as of December 31 before the acquisition. Also included are fair values for Subsidiary Company accounts. Cash Receivables Inventory Land Building and equipment (net) Franchise agreements Accounts payable Accrued expenses Longterm liabilities Common stock-$20 par value Common stock-$5 par value Additional paid-in capital Retained earnings, 1/1 Revenues Expenses Parent Company Subsidiary Company Book ValuesBook Values Fair Values 12/31 12/31 12/31 $ 215,000 58,550 $ 58,550 258,750 376,000 376,000 532,500 252,000 309,400 Land Buildings and equipment Goodwill Additional paid-in capital Expenses 767,500 136,000 114,700 780,000 282,000 342,900 245,000 240,000 279,400 (321,000) (173,000) (173,000) (140,000) (46,250) (46,250) (1,085,000) (545,000) (545,000) (660,000) (210,000) (70,000) (90,000) (482,500) (253,000) (996,250) (373,300) 956,000 346,000 Note: Parentheses indicate a credit balance. Determine the value that would be shown in Parent's consolidated financial statements for each of the accounts listed. (Input all amounts as positive values.) Hint: The numbers above are before acquisition - don't forget to update the parent company's numbers due to acquisition. For example, if the parent company paid cash to acquire the subsidiary, you need to subtract that cash from the account balances shown above. Accounts Amounts
Transcribed Image Text:On December 31, Parent acquires Subsidiary's outstanding stock by paying $188,000 in cash and issuing 15,500 shares of its own common stock with a fair value of $40 per share. Parent paid legal and accounting fees of $21,800 as well as $6,100 in stock issuance costs. Following are preacquisition financial balances for Parent Company and Subsidiary Company as of December 31 before the acquisition. Also included are fair values for Subsidiary Company accounts. Cash Receivables Inventory Land Building and equipment (net) Franchise agreements Accounts payable Accrued expenses Longterm liabilities Common stock-$20 par value Common stock-$5 par value Additional paid-in capital Retained earnings, 1/1 Revenues Expenses Parent Company Subsidiary Company Book ValuesBook Values Fair Values 12/31 12/31 12/31 $ 215,000 58,550 $ 58,550 258,750 376,000 376,000 532,500 252,000 309,400 Land Buildings and equipment Goodwill Additional paid-in capital Expenses 767,500 136,000 114,700 780,000 282,000 342,900 245,000 240,000 279,400 (321,000) (173,000) (173,000) (140,000) (46,250) (46,250) (1,085,000) (545,000) (545,000) (660,000) (210,000) (70,000) (90,000) (482,500) (253,000) (996,250) (373,300) 956,000 346,000 Note: Parentheses indicate a credit balance. Determine the value that would be shown in Parent's consolidated financial statements for each of the accounts listed. (Input all amounts as positive values.) Hint: The numbers above are before acquisition - don't forget to update the parent company's numbers due to acquisition. For example, if the parent company paid cash to acquire the subsidiary, you need to subtract that cash from the account balances shown above. Accounts Amounts
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