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November 11, 2022On January 1, 2011, Rand Corp. issued shares of its common stock to acquire all of the outstanding common stock of Spaulding Inc. Spaulding's book value was only $140,000 at the time, but Rand issued 12,000 shares having a par value of $1 per share and a fair value of $20 per share. Rand was willing to convey these shares because it felt that buildings (ten-year life) were undervalued on Spaulding's records by $60,000 while equipment (five-year life) was undervalued by $25,000. Any consideration transferred over fair value of identified net assets acquired is assigned to goodwill. Following are the individual financial records for these two companies for the year ended December 31, 2014. December 31, 2014. Revenues Expenses Equity in subsidiary earnings Net income Retained earnings, January 1, 2014 Net income (above) Dividends paid Retained earnings, December 31, 2014 Current assets Investment in Spaulding Inc. Buildings (net) Equipment (net) Total assets Liabilities Common stock Additional paid-in capital Retained earnings, December 31, 2014 (above) Total liabilities and stockholders' equity Required: Rand Corp. $ 372,000 (264,000) 25,000 $ 133,000 $ 765,000 133,000 (84,000) $814,000 $ 150,000 242,000 525,000 389,250 $1,306,250 $ 82,250 360,000 50,000 814,000 $1,306,250 Spaulding Inc. $108,000 (72,000) 0 $ 36,000 $102,000 36,000 (24,000) $114,000 $ 22,000 0 85,000 129,000 $236,000 $ 50,000 72,000 0 114,000 $236,000 Prepare a consolidation worksheet for this business combination.

November 11, 2022On January 1, 2011, Rand Corp. issued shares of its common stock to acquire all of the outstanding common stock of Spaulding Inc. Spaulding's book value was only $140,000 at the time, but Rand issued 12,000 shares having a par value of $1 per share and a fair value of $20 per share. Rand was willing to convey these shares because it felt that buildings (ten-year life) were undervalued on Spaulding's records by $60,000 while equipment (five-year life) was undervalued by $25,000. Any consideration transferred over fair value of identified net assets acquired is assigned to goodwill. Following are the individual financial records for these two companies for the year ended December 31, 2014. December 31, 2014. Revenues Expenses Equity in subsidiary earnings Net income Retained earnings, January 1, 2014 Net income (above) Dividends paid Retained earnings, December 31, 2014 Current assets Investment in Spaulding Inc. Buildings (net) Equipment (net) Total assets Liabilities Common stock Additional paid-in capital Retained earnings, December 31, 2014 (above) Total liabilities and stockholders' equity Required: Rand Corp. $ 372,000 (264,000) 25,000 $ 133,000 $ 765,000 133,000 (84,000) $814,000 $ 150,000 242,000 525,000 389,250 $1,306,250 $ 82,250 360,000 50,000 814,000 $1,306,250 Spaulding Inc. $108,000 (72,000) 0 $ 36,000 $102,000 36,000 (24,000) $114,000 $ 22,000 0 85,000 129,000 $236,000 $ 50,000 72,000 0 114,000 $236,000 Prepare a consolidation worksheet for this business combination.

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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November 11, 2022On January 1, 2011, Rand Corp. issued shares of its common stock to acquire all of the outstanding common stock of Spaulding Inc. Spaulding's book value was only $140,000 at the time, but Rand issued 12,000 shares having a par value of $1 per share and a fair value of $20 per share. Rand was willing to convey these shares because it felt that buildings (ten-year life) were undervalued on Spaulding's records by $60,000 while equipment (five-year life) was undervalued by $25,000. Any consideration transferred over fair value of identified net assets acquired is assigned to goodwill. Following are the individual financial records for these two companies for the year ended December 31, 2014. December 31, 2014. Revenues Expenses Equity in subsidiary earnings Net income Retained earnings, January 1, 2014 Net income (above) Dividends paid Retained earnings, December 31, 2014 Current assets Investment in Spaulding Inc. Buildings (net) Equipment (net) Total assets Liabilities Common stock Additional paid-in capital Retained earnings, December 31, 2014 (above) Total liabilities and stockholders' equity Required: Rand Corp. $ 372,000 (264,000) 25,000 $ 133,000 $ 765,000 133,000 (84,000) $814,000 $ 150,000 242,000 525,000 389,250 $1,306,250 $ 82,250 360,000 50,000 814,000 $1,306,250 Spaulding Inc. $108,000 (72,000) 0 $ 36,000 $102,000 36,000 (24,000) $114,000 $ 22,000 0 85,000 129,000 $236,000 $ 50,000 72,000 0 114,000 $236,000 Prepare a consolidation worksheet for this business combination.
Transcribed Image Text:November 11, 2022On January 1, 2011, Rand Corp. issued shares of its common stock to acquire all of the outstanding common stock of Spaulding Inc. Spaulding's book value was only $140,000 at the time, but Rand issued 12,000 shares having a par value of $1 per share and a fair value of $20 per share. Rand was willing to convey these shares because it felt that buildings (ten-year life) were undervalued on Spaulding's records by $60,000 while equipment (five-year life) was undervalued by $25,000. Any consideration transferred over fair value of identified net assets acquired is assigned to goodwill. Following are the individual financial records for these two companies for the year ended December 31, 2014. December 31, 2014. Revenues Expenses Equity in subsidiary earnings Net income Retained earnings, January 1, 2014 Net income (above) Dividends paid Retained earnings, December 31, 2014 Current assets Investment in Spaulding Inc. Buildings (net) Equipment (net) Total assets Liabilities Common stock Additional paid-in capital Retained earnings, December 31, 2014 (above) Total liabilities and stockholders' equity Required: Rand Corp. $ 372,000 (264,000) 25,000 $ 133,000 $ 765,000 133,000 (84,000) $814,000 $ 150,000 242,000 525,000 389,250 $1,306,250 $ 82,250 360,000 50,000 814,000 $1,306,250 Spaulding Inc. $108,000 (72,000) 0 $ 36,000 $102,000 36,000 (24,000) $114,000 $ 22,000 0 85,000 129,000 $236,000 $ 50,000 72,000 0 114,000 $236,000 Prepare a consolidation worksheet for this business combination.
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