Calculate the goodwill for this acquisition. Prepare the eliminating entries to consolidate the balance sheets of Marshall and Tucker at the date of acquisition. Prepare a worksheet to consolidate the balance sheets of these two companies as of January 1, 2018.
On January 1, 2018, Marshall Company acquired 100 percent of the outstanding common stock of Tucker Company. To acquire these shares, Marshall issued $200,000 in long-term liabilities and 20,000 shares of common stock having a par value of $1 per share but a fair value of $20 per share. Marshall paid $30,000 to accountants, lawyers, and brokers for assistance in the acquisition and another $12,000 in connection with stock issuance costs.
Prior to these transactions, the balance sheets for the two companies were as follows:
Marshall Company Book Value Tucker Company Book Value
Cash $ 60,000 $ 20,000
Receivables 270,000 90,000
Inventory 360,000 140,000
Land 200,000 180,000
Buildings (net) 420,000 210,000
Equipment (net) 160,000 50,000
Accounts payable (150,000) (40,000)
Long-term liabilities (430,000) (200,000)
Common stock—$1 par value (110,000) -
Common stock—$20 par value - (120,000)
Additional paid-in capital (360,000) -
In Marshall’s appraisal of Tucker, it deemed three accounts to be undervalued on the
Required:
- Calculate the goodwill for this acquisition.
- Prepare the eliminating entries to consolidate the balance sheets of Marshall and Tucker at the date of acquisition.
- Prepare a worksheet to consolidate the balance sheets of these two companies as of January 1, 2018.
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