Blank Corporation acquired 100 percent of Faith Corporation’s common stock on December 31, 20X2, for $207,000. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition:ItemBlank CorporationFaith CorporationAssets Cash$ 66,000$ 36,000Accounts Receivable85,00039,000Inventory107,00065,000Buildings and Equipment (net)224,000151,000Investment in Faith Corporation Stock207,000 Total Assets$ 689,000$ 291,000Liabilities and Stockholders’ Equity Accounts Payable$ 82,000$ 23,000Notes Payable142,00061,000Common Stock99,00043,000Retained Earnings366,000164,000Total Liabilities and Stockholders’ Equity$ 689,000$ 291,000At the date of the business combination, the book values of Faith’s net assets and liabilities approximated fair value. Assume that Faith Corporation’s accumulated depreciation on buildings and equipment on the acquisition date was $16,000.Required:Give the consolidation entry or entries needed to prepare a consolidated balance sheet immediately following the business combination.Prepare a consolidated balance sheet worksheet.

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Blank Corporation acquired 100 percent of Faith Corporation’s common stock on December 31, 20X2, for $207,000. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition:

Item	Blank Corporation	Faith Corporation
Assets
Cash	$ 66,000	$ 36,000
Accounts Receivable	85,000	39,000
Inventory	107,000	65,000
Buildings and Equipment (net)	224,000	151,000
Investment in Faith Corporation Stock	207,000
Total Assets	$ 689,000	$ 291,000
Liabilities and Stockholders’ Equity
Accounts Payable	$ 82,000	$ 23,000
Notes Payable	142,000	61,000
Common Stock	99,000	43,000
Retained Earnings	366,000	164,000
Total Liabilities and Stockholders’ Equity	$ 689,000	$ 291,000

At the date of the business combination, the book values of Faith’s net assets and liabilities approximated fair value. Assume that Faith Corporation’s accumulated depreciation on buildings and equipment on the acquisition date was $16,000.

Required:

Give the consolidation entry or entries needed to prepare a consolidated balance sheet immediately following the business combination.
Prepare a consolidated balance sheet worksheet.

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