Lucy Cat Incorporated acquires Walter Corporation, by issuing 160,000 shares of $1 par common stock with a market price of $25 per share on the acquisition date and paying $500,000 cash. The assets and liabilities on Walter's balance sheet were valued at fair values except equipment that was undervalued by $1,200,000. There was also an unrecorded patent valued at $160,000, as well as an unrecorded trademark valued at $300,000. In addition, the agreement provided for additional consideration, valued at $240,000, if certain earnings targets were met. The pre-acquisition balance sheets for the two companies at acquisition date are presented below. Hint: Lucy Cat's balance sheet reports amounts immediately before recording the acquisition. Cash Accounts receivable Inventory Property, plant, and equipment Accounts payable Salaries and taxes payable Notes payable Common stock Additional paid-in capital Retained earnings Lucy Cat's Walter Corp. $1,200,000 $1,040,000 1,000,000 540,000 1,016,000 1,100,000 9,200,000 1,426,000 $12,416,000 $4,106,000 $180,000 $150,000 1,800,000 184,000 2,000,000 1,800,000 1,000,000 240,000 3,800,000 426,000 3,636,000 1,306,000 $4,106,000 $12,416,000 Compute consolidated common stock.

Lucy Cat Incorporated acquires Walter Corporation, by issuing 160,000 shares of $1 par common stock with a market price of $25 per share on the acquisition date and paying $500,000 cash. The assets and liabilities on Walter's balance sheet were valued at fair values except equipment that was undervalued by $1,200,000. There was also an unrecorded patent valued at $160,000, as well as an unrecorded trademark valued at $300,000. In addition, the agreement provided for additional consideration, valued at $240,000, if certain earnings targets were met. The pre-acquisition balance sheets for the two companies at acquisition date are presented below. Hint: Lucy Cat's balance sheet reports amounts immediately before recording the acquisition. Cash Accounts receivable Inventory Property, plant, and equipment Accounts payable Salaries and taxes payable Notes payable Common stock Additional paid-in capital Retained earnings Lucy Cat's Walter Corp. $1,200,000 $1,040,000 1,000,000 540,000 1,016,000 1,100,000 9,200,000 1,426,000 $12,416,000 $4,106,000 $180,000 $150,000 1,800,000 184,000 2,000,000 1,800,000 1,000,000 240,000 3,800,000 426,000 3,636,000 1,306,000 $4,106,000 $12,416,000 Compute consolidated common stock.

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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