On January 1, Park Corporation and Strand Corporation had condensed balance sheets as follows: Items Park Strand Current assets $ 70,000 $ 20,000 Noncurrent assets 90,000 40,000 Total assets $ 160,000 $ 60,000 Current liabilities $ 30,000 $ 10,000 Long-term debt 50,000 0 Stockholders’ equity 80,000 50,000 Total liabilities and equities $ 160,000 $ 60,000 On January 2, Park borrowed $60,000 and used the proceeds to obtain 80 percent of the outstanding common shares of Strand. The acquisition price was considered proportionate to Strand’s total fair value. The $60,000 debt is payable in 10 equal annual principal payments, plus interest, beginning December 31. The excess fair value of the investment over the underlying book value of the acquired net assets is allocated to inventory (60 percent) and to goodwill (40 percent). Required: On a consolidated balance sheet as of January 2, calculate the amounts for each of the following:
On January 1, Park Corporation and Strand Corporation had condensed balance sheets as follows: Items Park Strand Current assets $ 70,000 $ 20,000 Noncurrent assets 90,000 40,000 Total assets $ 160,000 $ 60,000 Current liabilities $ 30,000 $ 10,000 Long-term debt 50,000 0 Stockholders’ equity 80,000 50,000 Total liabilities and equities $ 160,000 $ 60,000 On January 2, Park borrowed $60,000 and used the proceeds to obtain 80 percent of the outstanding common shares of Strand. The acquisition price was considered proportionate to Strand’s total fair value. The $60,000 debt is payable in 10 equal annual principal payments, plus interest, beginning December 31. The excess fair value of the investment over the underlying book value of the acquired net assets is allocated to inventory (60 percent) and to goodwill (40 percent). Required: On a consolidated balance sheet as of January 2, calculate the amounts for each of the following:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
On January 1, Park Corporation and Strand Corporation had condensed balance sheets as follows:
| Items | Park | Strand |
|---|---|---|
| Current assets | $ 70,000 | $ 20,000 |
| Noncurrent assets | 90,000 | 40,000 |
| Total assets | $ 160,000 | $ 60,000 |
| Current liabilities | $ 30,000 | $ 10,000 |
| Long-term debt | 50,000 | 0 |
| 80,000 | 50,000 | |
| Total liabilities and equities | $ 160,000 | $ 60,000 |
On January 2, Park borrowed $60,000 and used the proceeds to obtain 80 percent of the outstanding common shares of Strand. The acquisition price was considered proportionate to Strand’s total fair value. The $60,000 debt is payable in 10 equal annual principal payments, plus interest, beginning December 31. The excess fair value of the investment over the underlying book value of the acquired net assets is allocated to inventory (60 percent) and to
Required:
On a consolidated
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education