Parent Company acquires a subsidiary by issuing 100,000 common shares with a market value of $25 per share for all of the subsidiary's common stock. The subsidiary's assets and liabilities were recorded at fair values with the exception of equipment undervalued by $225,000. In addition, there were two unrecorded assets: a trademark valued at $175,000 and a customer list valued by the subsidiary at $60,000. The balance sheets of the parent and subsidiary immediately after the acquisition are presented below: Parent Subsidiary Cash $740,000 $420,000 Accounts Receivable 900,000 625,000 Inventory 440,000 750,000 Equity Investment 2,500,000 Property, plant and equipment (net) 3,190,000 1,205,000 $7,770,000 $3,000,000 Accounts payable $125,000 $145,000 Salaries payable 60,000 35,400 Long-Term Notes Payable 700,000 850,000 Common Stock 200,000 150,000 Additional paid-in capital 5,000,000 300,000 Retained earnings 1,685,000 1,519,600 $7,770,000 $3,000,000 Required: At what amounts will each of the following appear on the consolidated balance sheet? a. Inventory b. Equity Investment c. Property, plant and equipment (net of accumulated depreciation) d. Goodwill e. Common Stock f. Additional paid-in capital g. Retained Earnings h. Total Intangible Assets
Parent Company acquires a subsidiary by issuing 100,000 common shares with a market value of $25 per share for all of the subsidiary's common stock. The subsidiary's assets and liabilities were recorded at fair values with the exception of equipment undervalued by $225,000. In addition, there were two unrecorded assets: a trademark valued at $175,000 and a customer list valued by the subsidiary at $60,000. The balance sheets of the parent and subsidiary immediately after the acquisition are presented below:
|
|
Parent |
Subsidiary |
|
Cash |
$740,000 |
$420,000 |
|
|
900,000 |
625,000 |
|
Inventory |
440,000 |
750,000 |
|
Equity Investment |
2,500,000 |
|
|
Property, plant and equipment (net) |
3,190,000 |
1,205,000 |
|
|
$7,770,000 |
$3,000,000 |
|
Accounts payable |
$125,000 |
$145,000 |
|
Salaries payable |
60,000 |
35,400 |
|
Long-Term Notes Payable |
700,000 |
850,000 |
|
Common Stock |
200,000 |
150,000 |
|
Additional paid-in capital |
5,000,000 |
300,000 |
|
|
1,685,000 |
1,519,600 |
|
|
$7,770,000 |
$3,000,000 |
Required: At what amounts will each of the following appear on the consolidated
a. Inventory
b. Equity Investment
c. Property, plant and equipment (net of
d. Goodwill
e. Common Stock
f. Additional paid-in capital
g. Retained Earnings
h. Total Intangible Assets
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