On January 1, 2024, Presidio Company acquired 100 percent of the outstanding common stock of Mason Company. To acquire these hares, Presidio issued to the owners of Mason $273,000 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. Presidio paid $21,000 to accountants, lawyers, and brokers for assistance in the acquisition and another $6,000 in connection with stock issuance costs. Prior to these transactions, the balance sheets for the two companies were as follows: Cash Items 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, 1/1/24 Presidio Company $ 62,100 344,000 386,000 276,000 441,000 205,000 (192,000) (507,000) (110,000) 0 (360,000) (545,100) Note: Parentheses indicate a credit balance. Mason Company $ 38,400 170,000 150,000 222,000 233,000 58,500 (66,300) (273,000) (120,000) (412,600) 0 0 Presidio's appraisal of Mason's fair values deemed three accounts to be undervalued: Inventory by $6,850, Land by $18,800, and Buildings by $30,600. Presidio plans to maintain Mason's separate legal identity and to operate Mason as a wholly owned subsidiary. Required: a. Prepare Presidio's journal entries to record its acquisition of Mason, related professional fees paid, and stock acquisition costs.
On January 1, 2024, Presidio Company acquired 100 percent of the outstanding common stock of Mason Company. To acquire these hares, Presidio issued to the owners of Mason $273,000 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. Presidio paid $21,000 to accountants, lawyers, and brokers for assistance in the acquisition and another $6,000 in connection with stock issuance costs. Prior to these transactions, the balance sheets for the two companies were as follows: Cash Items 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, 1/1/24 Presidio Company $ 62,100 344,000 386,000 276,000 441,000 205,000 (192,000) (507,000) (110,000) 0 (360,000) (545,100) Note: Parentheses indicate a credit balance. Mason Company $ 38,400 170,000 150,000 222,000 233,000 58,500 (66,300) (273,000) (120,000) (412,600) 0 0 Presidio's appraisal of Mason's fair values deemed three accounts to be undervalued: Inventory by $6,850, Land by $18,800, and Buildings by $30,600. Presidio plans to maintain Mason's separate legal identity and to operate Mason as a wholly owned subsidiary. Required: a. Prepare Presidio's journal entries to record its acquisition of Mason, related professional fees paid, and stock acquisition costs.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On January 1, 2024, Presidio Company acquired 100 percent of the outstanding common stock of Mason Company. To acquire these
shares, Presidio issued to the owners of Mason $273,000 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. Presidio paid $21,000 to accountants, lawyers, and brokers for assistance in the
acquisition and another $6,000 in connection with stock issuance costs.
Prior to these transactions, the balance sheets for the two companies were as follows:
Cash
Items
Presidio
Company
$ 62,100
$ 38,400
344,000
386,000
276,000
170,000
150,000
222,000
233,000
58,500
(66,300)
441,000
11
205,000
(192,000)
(507,000) (273,000)
(110,000)
0
(120,000)
(360,000)
(545,100) (412,600)
Mason
Company
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, 1/1/24
Note: Parentheses indicate a credit balance.
Presidio's appraisal of Mason's fair values deemed three accounts to be undervalued: Inventory by $6,850, Land by $18,800, and
Buildings by $30,600. Presidio plans to maintain Mason's separate legal identity and to operate Mason as a wholly owned subsidiary.
Required:
a. Prepare Presidio's journal entries to record its acquisition of Mason, related professional fees paid, and stock acquisition costs.
0
0
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