On January 1, 2018, Marshall Company acquired 100 percent of the outstanding common stock of Tucker Company. To acquire theseshares, Marshall issued $350,000 in long-term liabilities and 20,000 shares of common stock having a par value of $1 per share but afair value of $10 per share. Marshall paid $31,000 to accountants, lawyers, and brokers for assistance in the acquisition and another$15,500 in connection with stock issuance costs.Prior to these transactions, the balance sheets for the two companies were as follows:MarshallCompanyTuckerCompanyCashReceivablesInventoryLandBuildings (net)Equipment (net)Accounts payableLong-term liabilitiesCommon stock-$1 par valueCommon stock-$20 par valueAdditional paid-in capitalRetained earnings, 1/1/18Note: Parentheses indicate a credit balance.Book Value Book Value$ 88,500 $ 22,000325,000168,000416,000237,000214,000256,000473,000284,000242,00050,700(191,000) (55,500)(529,000) (350,000)(110,000)(360,000)(568,500)(120,000)0(492,200)In Marshall's appraisal of Tucker, it deemed three accounts to be undervalued on the subsidiary's books: Inventory by $9,900, Land by$20,400, and Buildings by $28,400. Marshall plans to maintain Tucker's separate legal identity and to operate Tucker as a whollyowned subsidiary.a. Determine the amounts that Marshall Company would report in its postacquisition balance sheet. In preparing the postacquisitionbalance sheet, any required adjustments to income accounts from the acquisition should be closed to Marshall's retained earnings.Other accounts will also need to be added or adjusted to reflect the journal entries Marshall prepared in recording the acquisition.b. To verify the answers found in part (a), prepare a worksheet to consolidate the balance sheets of these two companies as ofJanuary 1, 2018. Complete this question by entering your answers in the tabs below.Required A Required BTo verify the answers found in part (a), prepare a worksheet to consolidate the balance sheets of these two companies as ofJanuary 1, 2018. (For accounts where multiple consolidation entries are required, combine all debit entries into one amountand enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enterthis amount in the credit column of the worksheet.)CashAccountsReceivablesInventoryLandequitiesMARSHALL COMPANY AND CONSOLIDATED SUBSIDIARYBuildings (net)Equipment (net)Investment in TuckerTotal assetsAccounts payableLong-term liabilitiesCommon stockAdditional paid-in capitalRetained earnings, 1/1/18Total liabilities and owners'WorksheetJanuary 1, 2018MarshallTuckerCompany CompanyConsolidation EntriesCreditDebitConsolidatedTotalsShow less

It is the single balance sheet in which the financial positions of both the parent and subsidiary…

On January 1, 2018, Marshall Company acquired 100 percent of the outstanding common stock of Tucker Company. To acquire these shares, Marshall issued $350,000 in long-term liabilities and 20,000 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Marshall paid $31,000 to accountants, lawyers, and brokers for assistance in the acquisition and another $15,500 in connection with stock issuance costs.

On January 1, 2018, Marshall Company acquired 100 percent of the outstanding common stock of Tucker Company. To acquire these shares, Marshall issued $350,000 in long-term liabilities and 20,000 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Marshall paid $31,000 to accountants, lawyers, and brokers for assistance in the acquisition and another $15,500 in connection with stock issuance costs.

FINANCIAL ACCOUNTING

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ISBN:9781259964947

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Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Concept explainers

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

On January 1, 2018, Marshall Company acquired 100 percent of the outstanding common stock of Tucker Company. To acquire these
shares, Marshall issued $350,000 in long-term liabilities and 20,000 shares of common stock having a par value of $1 per share but a
fair value of $10 per share. Marshall paid $31,000 to accountants, lawyers, and brokers for assistance in the acquisition and another
$15,500 in connection with stock issuance costs.
Prior to these transactions, the balance sheets for the two companies were as follows:
Marshall
Company
Tucker
Company
Cash
Receivables
Inventory
Land
Buildings (net)
Equipment (net)
Accounts payable
Long-term liabilities
Common stock-$1 par value
Common stock-$20 par value
Additional paid-in capital
Retained earnings, 1/1/18
Note: Parentheses indicate a credit balance.
Book Value Book Value
$ 88,500 $ 22,000
325,000
168,000
416,000
237,000
214,000
256,000
473,000
284,000
242,000
50,700
(191,000) (55,500)
(529,000) (350,000)
(110,000)
(360,000)
(568,500)
(120,000)
0
(492,200)
In Marshall's appraisal of Tucker, it deemed three accounts to be undervalued on the subsidiary's books: Inventory by $9,900, Land by
$20,400, and Buildings by $28,400. Marshall plans to maintain Tucker's separate legal identity and to operate Tucker as a wholly
owned subsidiary.
a. Determine the amounts that Marshall Company would report in its postacquisition balance sheet. In preparing the postacquisition
balance sheet, any required adjustments to income accounts from the acquisition should be closed to Marshall's retained earnings.
Other accounts will also need to be added or adjusted to reflect the journal entries Marshall prepared in recording the acquisition.
b. To verify the answers found in part (a), prepare a worksheet to consolidate the balance sheets of these two companies as of
January 1, 2018.

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