On December 31, Phoenix Corporation acquired all of Sedona Corporation’s voting stock in exchange for $560,000 cash. At the acquisition date, the fair values of Sedona’s assets and liabilities equaled their carrying values, except that the fair value of the inventory was $20,000 lower than the carrying value, the fair value of the equipment was $50,000 higher than the carrying value, and the fair value of the long-term debt was $4,000 lower than the carrying value. The separate condensed balance sheets of the two companies immediately after the acquisition (on 12/31) are as follows: Phoenix Sedona Cash $ 90,000 $ 60,000 Accounts receivable 130,000 25,000 Inventory 160,000 70,000 Plant and equipment (net) 470,000 275,000 Investment in Sedona 560,000 . Total assets $1,410,000 $ 430,000 Accounts payable $ 170,000 $ 85,000 Long-term debt 150,000 55,000 Common stock ($10 par) and APIC 330,000 70,000 Retained earnings 760,000 220,000 Total liabilities and shareholders’ equity $1,410,000 $ 430,000 In the two firms’ consolidated balance sheet of 12/31, at what amount should each of the following items be reported: a) Goodwill: _______________ b) Total shareholders’ equity: _______ c) Inventory: ____ d) Total assets: ____ Had Phoenix’s acquisition cost for Sedona been $320,000 rather than $560,000, at what amount would Phoenix report as “Investment in Sedona” in its balance sheet at 12/31?
On December 31, Phoenix Corporation acquired all of Sedona Corporation’s voting stock in exchange for $560,000 cash. At the acquisition date, the fair values of Sedona’s assets and liabilities equaled their carrying values, except that the fair value of the inventory was $20,000 lower than the carrying value, the fair value of the equipment was $50,000 higher than the carrying value, and the fair value of the long-term debt was $4,000 lower than the carrying value. The separate condensed balance sheets of the two companies immediately after the acquisition (on 12/31) are as follows:
Phoenix Sedona
Cash $ 90,000 $ 60,000
Inventory 160,000 70,000
Plant and equipment (net) 470,000 275,000
Investment in Sedona 560,000 .
Total assets $1,410,000 $ 430,000
Accounts payable $ 170,000 $ 85,000
Long-term debt 150,000 55,000
Common stock ($10 par) and APIC 330,000 70,000
Total liabilities and shareholders’ equity $1,410,000 $ 430,000
- In the two firms’ consolidated
balance sheet of 12/31, at what amount should each of the following items be reported:
- a)
Goodwill : _______________ - b) Total shareholders’ equity: _______
- c) Inventory: ____
- d) Total assets: ____
- Had Phoenix’s acquisition cost for Sedona been $320,000 rather than $560,000, at what amount would Phoenix report as “Investment in Sedona” in its balance sheet at 12/31?
Answer: __________
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