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In an attempt to expand its operations, Palto Company acquires Saleen Company on January 1, 2015. Palto pays cash in exchange for the common stock of Saleen. On the date of acquisition, Saleen has the following balance sheet: Saleen Company Balance Sheet January 1,2015 Assets Liabilities and Equity $ 20,000 Current liabilities . 50,000 Bonds payable ..... 40,000 Common stock ($1 par). . 200,000 Paidin capital in excess of par ... (50,000) Retained earnings .. 60,000 Accounts receivable $ 40,000 ... Inventory . Land...... 100,000 10,000 90,000 Buildings .... Accumulated depreciation Equipment . Accumulated depreciation 60,000 (20,000) $300,000 Total assets.. Total liabilities and equity $300,000 An appraisal provides the following fair values for assets: $ 20,000 60,000 80,000 320,000 60,000 Accounts receivable Inventory . Land. ... Buildings Equipment Copyright .. 50,000 .... Palto Company Balance Sheet January 1,2015 Assets Liabilities and Equity $ 261,000 65,000 80,000 300,000 100,000 Cash Current liabilities . $ 80,000 Bonds payable Common stock ($1 par). Paid-in capital in excess of Retained earnings Accounts receivable Inventory .. Investment in Saleen Land.. 200,000 20,000 180,000 546,000 par Buildings Accumulated depreciation Equipment Accumulated depreciation 250,000 (80,000) 90,000 (40,000) $1,026,000 Total assets. Total liabilities and equity $1,026,000 ....

In an attempt to expand its operations, Palto Company acquires Saleen Company on January 1, 2015. Palto pays cash in exchange for the common stock of Saleen. On the date of acquisition, Saleen has the following balance sheet: Saleen Company Balance Sheet January 1,2015 Assets Liabilities and Equity $ 20,000 Current liabilities . 50,000 Bonds payable ..... 40,000 Common stock ($1 par). . 200,000 Paidin capital in excess of par ... (50,000) Retained earnings .. 60,000 Accounts receivable $ 40,000 ... Inventory . Land...... 100,000 10,000 90,000 Buildings .... Accumulated depreciation Equipment . Accumulated depreciation 60,000 (20,000) $300,000 Total assets.. Total liabilities and equity $300,000 An appraisal provides the following fair values for assets: $ 20,000 60,000 80,000 320,000 60,000 Accounts receivable Inventory . Land. ... Buildings Equipment Copyright .. 50,000 .... Palto Company Balance Sheet January 1,2015 Assets Liabilities and Equity $ 261,000 65,000 80,000 300,000 100,000 Cash Current liabilities . $ 80,000 Bonds payable Common stock ($1 par). Paid-in capital in excess of Retained earnings Accounts receivable Inventory .. Investment in Saleen Land.. 200,000 20,000 180,000 546,000 par Buildings Accumulated depreciation Equipment Accumulated depreciation 250,000 (80,000) 90,000 (40,000) $1,026,000 Total assets. Total liabilities and equity $1,026,000 ....

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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Use the preceding information for Palto’s purchase of Saleen common stock. Assume Palto purchases 80% of the Saleen common stock for $300,000 cash. Palto has the following balance sheet immediately after the purchase:

1. Prepare the value analysis and the determination and distribution of excess schedule for the investment in Saleen.
2. Complete a consolidated worksheet for Palto Company and its subsidiary Saleen Company as of January 1, 2015.

In an attempt to expand its operations, Palto Company acquires Saleen Company on January 1, 2015. Palto pays cash in exchange for the common stock of Saleen. On the date of acquisition, Saleen has the following balance sheet: Saleen Company Balance Sheet January 1,2015 Assets Liabilities and Equity $ 20,000 Current liabilities . 50,000 Bonds payable ..... 40,000 Common stock ($1 par). . 200,000 Paidin capital in excess of par ... (50,000) Retained earnings .. 60,000 Accounts receivable $ 40,000 ... Inventory . Land...... 100,000 10,000 90,000 Buildings .... Accumulated depreciation Equipment . Accumulated depreciation 60,000 (20,000) $300,000 Total assets.. Total liabilities and equity $300,000 An appraisal provides the following fair values for assets: $ 20,000 60,000 80,000 320,000 60,000 Accounts receivable Inventory . Land. ... Buildings Equipment Copyright .. 50,000 ....
Transcribed Image Text:In an attempt to expand its operations, Palto Company acquires Saleen Company on January 1, 2015. Palto pays cash in exchange for the common stock of Saleen. On the date of acquisition, Saleen has the following balance sheet: Saleen Company Balance Sheet January 1,2015 Assets Liabilities and Equity $ 20,000 Current liabilities . 50,000 Bonds payable ..... 40,000 Common stock ($1 par). . 200,000 Paidin capital in excess of par ... (50,000) Retained earnings .. 60,000 Accounts receivable $ 40,000 ... Inventory . Land...... 100,000 10,000 90,000 Buildings .... Accumulated depreciation Equipment . Accumulated depreciation 60,000 (20,000) $300,000 Total assets.. Total liabilities and equity $300,000 An appraisal provides the following fair values for assets: $ 20,000 60,000 80,000 320,000 60,000 Accounts receivable Inventory . Land. ... Buildings Equipment Copyright .. 50,000 ....
Palto Company Balance Sheet January 1,2015 Assets Liabilities and Equity $ 261,000 65,000 80,000 300,000 100,000 Cash Current liabilities . $ 80,000 Bonds payable Common stock ($1 par). Paid-in capital in excess of Retained earnings Accounts receivable Inventory .. Investment in Saleen Land.. 200,000 20,000 180,000 546,000 par Buildings Accumulated depreciation Equipment Accumulated depreciation 250,000 (80,000) 90,000 (40,000) $1,026,000 Total assets. Total liabilities and equity $1,026,000 ....
Transcribed Image Text:Palto Company Balance Sheet January 1,2015 Assets Liabilities and Equity $ 261,000 65,000 80,000 300,000 100,000 Cash Current liabilities . $ 80,000 Bonds payable Common stock ($1 par). Paid-in capital in excess of Retained earnings Accounts receivable Inventory .. Investment in Saleen Land.. 200,000 20,000 180,000 546,000 par Buildings Accumulated depreciation Equipment Accumulated depreciation 250,000 (80,000) 90,000 (40,000) $1,026,000 Total assets. Total liabilities and equity $1,026,000 ....
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