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Bates Corporation purchased 100% of the common stock of Johns Inc. on January 2, 2021. Johns' balance sheet on January 2, 2021 was as follows: Accounts receivable net Inventory Land Building-net Equipment-net Total Assets $350,000 250,000 200,000 450,000 120,000 $1,370,000 Current liabilities Long term debt Common stock ($1 par) Paid-in capital Retained earnings Total Liabilities & Equity $250,000 300,000 45,000 300,000 475,000 $1,370.000 Fair values agree with book values except for inventory, land, and equipment that have fair values of $275,000, $150,000, and $150,000, respectively. Johns has unrecorded patent rights valued at $75,000. Required: a. Prepare a schedule to assign values to Johns' post-acquisition assets and liabilities assuming Bates paid $1,000,000 cash for the acquisition. b. Prepare the consolidation entries for a January 2, 2021 consolidated balance sheet.

Bates Corporation purchased 100% of the common stock of Johns Inc. on January 2, 2021. Johns' balance sheet on January 2, 2021 was as follows: Accounts receivable net Inventory Land Building-net Equipment-net Total Assets $350,000 250,000 200,000 450,000 120,000 $1,370,000 Current liabilities Long term debt Common stock ($1 par) Paid-in capital Retained earnings Total Liabilities & Equity $250,000 300,000 45,000 300,000 475,000 $1,370.000 Fair values agree with book values except for inventory, land, and equipment that have fair values of $275,000, $150,000, and $150,000, respectively. Johns has unrecorded patent rights valued at $75,000. Required: a. Prepare a schedule to assign values to Johns' post-acquisition assets and liabilities assuming Bates paid $1,000,000 cash for the acquisition. b. Prepare the consolidation entries for a January 2, 2021 consolidated balance sheet.

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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Bates Corporation purchased 100% of the common stock of Johns Inc. on January 2, 2021. Johns' balance sheet on January 2, 2021 was as follows: Accounts receivable net Inventory Land Building-net Equipment-net Total Assets $350,000 250,000 200,000 450,000 120,000 $1.370,000 Current liabilities Long term debt Common stock ($1 par) Paid-in capital Retained earnings Total Liabilities & Equity $250,000 300,000 45,000 300,000 475,000 $1,370,000 Fair values agree with book values except for inventory, land, and equipment that have fair values of $275,000, $150,000, and $150,000, respectively. Johns has unrecorded patent rights valued at $75,000. Required: a Prepare a schedule to assign values to Johns' post-acquisition assets and liabilities assuming Bates paid $1,000,000 cash for the acquisition. b. Prepare the consolidation entries for a January 2, 2021 consolidated balance sheet.
Transcribed Image Text:Bates Corporation purchased 100% of the common stock of Johns Inc. on January 2, 2021. Johns' balance sheet on January 2, 2021 was as follows: Accounts receivable net Inventory Land Building-net Equipment-net Total Assets $350,000 250,000 200,000 450,000 120,000 $1.370,000 Current liabilities Long term debt Common stock ($1 par) Paid-in capital Retained earnings Total Liabilities & Equity $250,000 300,000 45,000 300,000 475,000 $1,370,000 Fair values agree with book values except for inventory, land, and equipment that have fair values of $275,000, $150,000, and $150,000, respectively. Johns has unrecorded patent rights valued at $75,000. Required: a Prepare a schedule to assign values to Johns' post-acquisition assets and liabilities assuming Bates paid $1,000,000 cash for the acquisition. b. Prepare the consolidation entries for a January 2, 2021 consolidated balance sheet.
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