Condensed balance sheets for Phillips Company and Solina Company on January 1, 2013, are as follows: Phillips Solina Current assets $197,000 $90,970 Plant and equipment (net) 415,800 135,060 Total assets $612,800 $226,030 Total liabilities $102,780 $32,260 Common stock, $10 par value 356,000 145,100 Other contributed capital 126,380 50,440 Retained earnings (deficit) 27,640 (1,770 ) Total liabilities and equities $612,800 $226,030 On January 1, 2013, the stockholders of Phillips and Solina agreed to a consolidation. Because FASB requires that one party be recognized as the acquirer and the other as the acquiree, it was agreed that Phillips was acquiring Solina. Phillips agreed to issue 19,460 shares of its $10 par stock to acquire all the net assets of Solina at a time when the fair value of Phillips’ common stock was $15 per share. On the date of consolidation, the fair values of Solina’s current assets and liabilities were equal to their book values. The fair value of plant and equipment was, however, $144,180. Phillips will incur $21,060 of direct acquisition costs and $6,540 in stock issue costs. Prepare the journal entries on the books of Phillips to record the acquisition of Solina Company’s net assets. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit Acquisition Costs Expense Cash Common Stock Current Assets Goodwill Liabilities No Entry Other Contributed Capital Plant and Equipment Acquisition Costs Expense Cash Common Stock Current Assets Goodwill Liabilities No Entry Other Contributed Capital Plant and Equipment Acquisition Costs Expense Cash Common Stock Current Assets Goodwill Liabilities No Entry Other Contributed Capital Plant and Equipment Acquisition Costs Expense Cash Common Stock Current Assets Goodwill Liabilities No Entry Other Contributed Capital Plant and Equipment Acquisition Costs Expense Cash Common Stock Current Assets Goodwill Liabilities No Entry Other Contributed Capital Plant and Equipment Acquisition Costs Expense Cash Common Stock Current Assets Goodwill Liabilities No Entry Other Contributed Capital Plant and Equipment (To record assets and liabilities acquired) Acquisition Costs Expense Cash Common Stock Current Assets Goodwill Liabilities No Entry Other Contributed Capital Plant and Equipment Acquisition Costs Expense Cash Common Stock Current Assets Goodwill Liabilities No Entry Other Contributed Capital Plant and Equipment (To record the direct acquisition costs) Acquisition Costs Expense Cash Common Stock Current Assets Goodwill Liabilities No Entry Other Contributed Capital Plant and Equipment Acquisition Costs Expense Cash Common Stock Current Assets Goodwill Liabilities No Entry Other Contributed Capital Plant and Equipment (To record the stock issue costs

Condensed balance sheets for Phillips Company and Solina Company on January 1, 2013, are as follows: Phillips Solina Current assets $197,000 $90,970 Plant and equipment (net) 415,800 135,060 Total assets $612,800 $226,030 Total liabilities $102,780 $32,260 Common stock, $10 par value 356,000 145,100 Other contributed capital 126,380 50,440 Retained earnings (deficit) 27,640 (1,770 ) Total liabilities and equities $612,800 $226,030 On January 1, 2013, the stockholders of Phillips and Solina agreed to a consolidation. Because FASB requires that one party be recognized as the acquirer and the other as the acquiree, it was agreed that Phillips was acquiring Solina. Phillips agreed to issue 19,460 shares of its $10 par stock to acquire all the net assets of Solina at a time when the fair value of Phillips’ common stock was $15 per share. On the date of consolidation, the fair values of Solina’s current assets and liabilities were equal to their book values. The fair value of plant and equipment was, however, $144,180. Phillips will incur $21,060 of direct acquisition costs and $6,540 in stock issue costs. Prepare the journal entries on the books of Phillips to record the acquisition of Solina Company’s net assets. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit Acquisition Costs Expense Cash Common Stock Current Assets Goodwill Liabilities No Entry Other Contributed Capital Plant and Equipment Acquisition Costs Expense Cash Common Stock Current Assets Goodwill Liabilities No Entry Other Contributed Capital Plant and Equipment Acquisition Costs Expense Cash Common Stock Current Assets Goodwill Liabilities No Entry Other Contributed Capital Plant and Equipment Acquisition Costs Expense Cash Common Stock Current Assets Goodwill Liabilities No Entry Other Contributed Capital Plant and Equipment Acquisition Costs Expense Cash Common Stock Current Assets Goodwill Liabilities No Entry Other Contributed Capital Plant and Equipment Acquisition Costs Expense Cash Common Stock Current Assets Goodwill Liabilities No Entry Other Contributed Capital Plant and Equipment (To record assets and liabilities acquired) Acquisition Costs Expense Cash Common Stock Current Assets Goodwill Liabilities No Entry Other Contributed Capital Plant and Equipment Acquisition Costs Expense Cash Common Stock Current Assets Goodwill Liabilities No Entry Other Contributed Capital Plant and Equipment (To record the direct acquisition costs) Acquisition Costs Expense Cash Common Stock Current Assets Goodwill Liabilities No Entry Other Contributed Capital Plant and Equipment Acquisition Costs Expense Cash Common Stock Current Assets Goodwill Liabilities No Entry Other Contributed Capital Plant and Equipment (To record the stock issue costs

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

100%

Condensed balance sheets for Phillips Company and Solina Company on January 1, 2013, are as follows:

	Phillips	Solina
Current assets	$197,000	$90,970
Plant and equipment (net)	415,800	135,060
Total assets	$612,800	$226,030

Total liabilities	$102,780	$32,260
Common stock, $10 par value	356,000	145,100
Other contributed capital	126,380	50,440
Retained earnings (deficit)	27,640	(1,770	)
Total liabilities and equities	$612,800	$226,030

On January 1, 2013, the stockholders of Phillips and Solina agreed to a consolidation. Because FASB requires that one party be recognized as the acquirer and the other as the acquiree, it was agreed that Phillips was acquiring Solina. Phillips agreed to issue 19,460 shares of its $10 par stock to acquire all the net assets of Solina at a time when the fair value of Phillips’ common stock was $15 per share.

On the date of consolidation, the fair values of Solina’s current assets and liabilities were equal to their book values. The fair value of plant and equipment was, however, $144,180. Phillips will incur $21,060 of direct acquisition costs and $6,540 in stock issue costs.

Prepare the journal entries on the books of Phillips to record the acquisition of Solina Company’s net assets. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Account Titles and Explanation	Debit	Credit
Acquisition Costs Expense Cash Common Stock Current Assets Goodwill Liabilities No Entry Other Contributed Capital Plant and Equipment
Acquisition Costs Expense Cash Common Stock Current Assets Goodwill Liabilities No Entry Other Contributed Capital Plant and Equipment
Acquisition Costs Expense Cash Common Stock Current Assets Goodwill Liabilities No Entry Other Contributed Capital Plant and Equipment
Acquisition Costs Expense Cash Common Stock Current Assets Goodwill Liabilities No Entry Other Contributed Capital Plant and Equipment
Acquisition Costs Expense Cash Common Stock Current Assets Goodwill Liabilities No Entry Other Contributed Capital Plant and Equipment
Acquisition Costs Expense Cash Common Stock Current Assets Goodwill Liabilities No Entry Other Contributed Capital Plant and Equipment
(To record assets and liabilities acquired)
Acquisition Costs Expense Cash Common Stock Current Assets Goodwill Liabilities No Entry Other Contributed Capital Plant and Equipment
Acquisition Costs Expense Cash Common Stock Current Assets Goodwill Liabilities No Entry Other Contributed Capital Plant and Equipment
(To record the direct acquisition costs)
Acquisition Costs Expense Cash Common Stock Current Assets Goodwill Liabilities No Entry Other Contributed Capital Plant and Equipment
Acquisition Costs Expense Cash Common Stock Current Assets Goodwill Liabilities No Entry Other Contributed Capital Plant and Equipment
(To record the stock issue costs)

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.