Liabilities and Equity Assets $ 60,000 40,000 120,000 Liabilities ... Common stock ($10 par). Paid-in capital in excess of par Retained earnings... Total liabilities and equity ...... Cash $150,000 100,000 50,000 100,000 Inventory Land.... Building (net) Total assets... 180,000 $400,000 $400,000
Bell Corporation purchases all of the outstanding stock of Stockdon Corporation for $220,000 in cash on January 1, 2017. On the purchase date, Stockdon Corporation has the following condensed
Any excess of book value over cost is attributable to the building, which is currently overstated on Stockdon’s books. All other assets and liabilities have book values equal to fair values. The building has an estimated 10-year life with no salvage value.
The
Bell Stockdon
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180,000 143,000
Inventory . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . 60,000 30,000
Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120,000 120,000
Building (net) . . . . . . . . . . . . . . . . . . . . . . . . . . 600,000 162,000
Investment in Stockdon Corporation . . . . 220,000
Accounts Payable . . . . . . . . . . . . . . . . . . . . . (405,000) (210,000)
Common Stock ($3 par) . . . . . . . . . . .. . . . . (300,000)
Common Stock ($10 par) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (100,000)
Paid-In Capital in Excess of Par . . . . . . . . . . (180,000) (50,000)
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (210,000) (40,000)
Cost of Goods Sold . . . . . . . . . . . . . . . .. . . . . . 120,000 35,000
Other Expenses . . . . . . . . . . . . . . . . . . . . . . .. . . . 45,000 10,000
Dividends Declared . . . . . . . . . . . . . . . . . . . .. . . . 5,000
Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0
1. Prepare a determination and distribution of excess schedule for the investment. (A value analysis is not needed.)
2. Prepare the 2017 consolidated worksheet. Include columns for the eliminations and adjustments,
the consolidated income statement, the controlling retained earnings, and the consolidated balance sheet.
3. Prepare the 2017 consolidated statements, including the income statement, retained earnings statement, and balance sheet.
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