Burns directs Quigley to seek additional financing for expansion through a new long-term debt issue. Consequently, Quigley will issue a set of financial statements separate from that of its new parent to support its request for debt and accompanying regulatory filings. Quigley elects to apply pushdown accounting in order to show recent fair valuations for its assets. Prepare a separate acquisition-date balance sheet for Quigley Corporation using pushdown accounting.
Burns directs Quigley to seek additional financing for expansion through a new long-term debt issue. Consequently, Quigley will issue a set of financial statements separate from that of its new parent to support its request for debt and accompanying regulatory filings. Quigley elects to apply pushdown accounting in order to show recent fair valuations for its assets. Prepare a separate acquisition-date balance sheet for Quigley Corporation using pushdown accounting.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On May 1, Burns Corporation acquired 100 percent of the outstanding ownership shares of Quigley Corporation in exchange for
$728,000 cash. At the acquisition date, Quigley's book and fair values were as follows:
Cash
Receivables
Inventory
Land
Building and equipment (net)
Patented technology
Total assets
Accounts payable
Long-term liabilities
Common stock ($5 par value)
Additional paid-in capital
Retained earnings
Total liabilities and stockholders equity
Total assets
Assets
Book Value
$ 112,000 $
218,000
232,000
$
177,000
323,000
0
$1,062,000
$ 162,500 $
638,000
210,000
90,000
(38,500)
$1,062,000
Burns directs Quigley to seek additional financing for expansion through a new long-term debt issue. Consequently, Quigley will issue
a set of financial statements separate from that of its new parent to support its request for debt and accompanying regulatory filings.
Quigley elects to apply pushdown accounting in order to show recent fair valuations for its assets.
Prepare a separate acquisition-date balance sheet for Quigley Corporation using pushdown accounting.
QUIGLEY CORPORATION
Balance Sheet
May 1
Fair Value
112,000
218,000
302,000
137,000
403,000
220,000
$ 1,392,000
162,500
638,000
Liabilities and stockholders' Equity
0 Total liabilities and stockholders' equity $
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