P3.4 Consolidated Balance Sheet Working Paper, Bargain Purchase On January 1, 2019, Paxon Corporation acquired all of the outstanding common stock of Saxon Company for $1.7 billion cash. The balance sheets of Paxon and Saxon, immediately prior to the combination, are shown below: Balance Sheets (in millions) Assets Cash and receivables... Inventory.... Equity method investments Land. Buildings and equipment, net Total assets Liabilities and Shareholders' Equity Current liabilities.. Long-term debt Common stock, par value Additional paid-in capital Retained earnings Total liabilities and shareholders' equity ******. (in millions) Inventory... Equity method investments Paxon Land........ Buildings and equipment, net $2,860 1,700 650 2,400 $7,610 $1,500 2,000 500 1,200 2,410 $7,610 Saxon $ 720 900 300 175 600 $2,695 Several of Saxon's assets had fair values that were different from their book values. Estimates of the fair values of these items follow: $800 $1,000 400 100 350 845 $2,695 Estimated Fair Value 250 420 900 L In addition, Saxon had previously unrecorded identifiable assets valued at $110 million. Required Calculate the gain on acquisition in this bargain purchase. b. Prepare a working paper to consolidate the balance sheets of Paxon and Saxon at January 1, 2019. Present the consolidated balance sheet, in good form, at the date of acquisition. C.
P3.4 Consolidated Balance Sheet Working Paper, Bargain Purchase On January 1, 2019, Paxon Corporation acquired all of the outstanding common stock of Saxon Company for $1.7 billion cash. The balance sheets of Paxon and Saxon, immediately prior to the combination, are shown below: Balance Sheets (in millions) Assets Cash and receivables... Inventory.... Equity method investments Land. Buildings and equipment, net Total assets Liabilities and Shareholders' Equity Current liabilities.. Long-term debt Common stock, par value Additional paid-in capital Retained earnings Total liabilities and shareholders' equity ******. (in millions) Inventory... Equity method investments Paxon Land........ Buildings and equipment, net $2,860 1,700 650 2,400 $7,610 $1,500 2,000 500 1,200 2,410 $7,610 Saxon $ 720 900 300 175 600 $2,695 Several of Saxon's assets had fair values that were different from their book values. Estimates of the fair values of these items follow: $800 $1,000 400 100 350 845 $2,695 Estimated Fair Value 250 420 900 L In addition, Saxon had previously unrecorded identifiable assets valued at $110 million. Required Calculate the gain on acquisition in this bargain purchase. b. Prepare a working paper to consolidate the balance sheets of Paxon and Saxon at January 1, 2019. Present the consolidated balance sheet, in good form, at the date of acquisition. C.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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