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M Company purchased 80% of the outstanding common stock of W Company on January 2, 2020, for $390,000. Balance sheets for M Company and W Company immediately after the stock acquisition were as follows: Current assets Investment in W Company Plant and equipment (net) Land Current liabilities Long-term notes payable Common stock Other contributed capital Retained earnings M Company $160,000 390,000 600,000 40,000 $1,190,000 $130,000 -0- 480,000 266,000 314,000 $1,190,000 W Company $103,000 -0- 220,000 122,000 $445,000 $51,000 32,000 150,000 74,000 138,000 $445,000 W Company owed M Company $16,000 on open account on the date of acquisition. Prepare a consolidated balance sheet for M and W Companies on the date of acquisition. Any difference between the value implied by the purchase price of the investment and the book value of net assets acquired relates to subsidiary land. The book values of W Company's other assets and liabilities are equal to their fair values. (List assets in order of liquidity.)

M Company purchased 80% of the outstanding common stock of W Company on January 2, 2020, for $390,000. Balance sheets for M Company and W Company immediately after the stock acquisition were as follows: Current assets Investment in W Company Plant and equipment (net) Land Current liabilities Long-term notes payable Common stock Other contributed capital Retained earnings M Company $160,000 390,000 600,000 40,000 $1,190,000 $130,000 -0- 480,000 266,000 314,000 $1,190,000 W Company $103,000 -0- 220,000 122,000 $445,000 $51,000 32,000 150,000 74,000 138,000 $445,000 W Company owed M Company $16,000 on open account on the date of acquisition. Prepare a consolidated balance sheet for M and W Companies on the date of acquisition. Any difference between the value implied by the purchase price of the investment and the book value of net assets acquired relates to subsidiary land. The book values of W Company's other assets and liabilities are equal to their fair values. (List assets in order of liquidity.)

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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M Company purchased 80% of the outstanding common stock of W Company on January 2, 2020, for $390,000. Balance sheets for M Company and W Company immediately after the stock acquisition were as follows: Current assets Investment in W Company Plant and equipment (net) Land Current liabilities Long-term notes payable Common stock Other contributed capital Retained earnings M Company $160,000 390,000 600,000 40,000 $1,190,000 $130,000 -0- 480,000 266,000 314,000 $1,190,000 W Company $103,000 -0- 220,000 122,000 $445,000 $51,000 32,000 150,000 74,000 138,000 $445,000 W Company owed M Company $16,000 on open account on the date of acquisition. Prepare a consolidated balance sheet for M and W Companies on the date of acquisition. Any difference between the value implied by the purchase price of the investment and the book value of net assets acquired relates to subsidiary land. The book values of W Company's other assets and liabilities are equal to their fair values. (List assets in order of liquidity.)
Transcribed Image Text:M Company purchased 80% of the outstanding common stock of W Company on January 2, 2020, for $390,000. Balance sheets for M Company and W Company immediately after the stock acquisition were as follows: Current assets Investment in W Company Plant and equipment (net) Land Current liabilities Long-term notes payable Common stock Other contributed capital Retained earnings M Company $160,000 390,000 600,000 40,000 $1,190,000 $130,000 -0- 480,000 266,000 314,000 $1,190,000 W Company $103,000 -0- 220,000 122,000 $445,000 $51,000 32,000 150,000 74,000 138,000 $445,000 W Company owed M Company $16,000 on open account on the date of acquisition. Prepare a consolidated balance sheet for M and W Companies on the date of acquisition. Any difference between the value implied by the purchase price of the investment and the book value of net assets acquired relates to subsidiary land. The book values of W Company's other assets and liabilities are equal to their fair values. (List assets in order of liquidity.)
Current Assets Plant and Equipment Land Total Current Assets Current Liabilities Long-term Notes Payable Common Stock Other Contributed Capital Retained Earnings Noncontrolling Interest Total Current Liabilities M COMPANY AND SUBSIDIARY Consolidated Balance Sheet January 2, 2020 Assets LA tA Liabilities and Stockholders' Equity $ LA ta
Transcribed Image Text:Current Assets Plant and Equipment Land Total Current Assets Current Liabilities Long-term Notes Payable Common Stock Other Contributed Capital Retained Earnings Noncontrolling Interest Total Current Liabilities M COMPANY AND SUBSIDIARY Consolidated Balance Sheet January 2, 2020 Assets LA tA Liabilities and Stockholders' Equity $ LA ta
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