Peace Computer Corporation acquired 90 percent of Symbol Software Company’s common stock on January 2, 20X3, by issuing preferred stock with a par value of $6 per share and a market value of $8.10 per share. A total of 10,000 shares of preferred stock was issued. Balance sheet data for the two companies immediately before the business combination are as follows: Peace Computer Corporation Symbol Software Company Book Value Fair Value Book Value Fair Value Cash $ 200,000 $ 200,000 $ 50,000 $ 50,000 Other Assets 400,000 400,000 120,000 120,000 Total Debits $ 600,000 $ 170,000 Current Liabilities $ 100,000 100,000 $ 80,000 80,000 Common Stock 300,000 50,000 Retained Earnings 200,000 40,000 Total Credits $ 600,000 $ 170,000 Required: Prepare a consolidated balance sheet for the companies immediately after Peace obtains ownership of Symbol by issuing the preferred stock.
Peace Computer Corporation acquired 90 percent of Symbol Software Company’s common stock on January 2, 20X3, by issuing preferred stock with a par value of $6 per share and a market value of $8.10 per share. A total of 10,000 shares of preferred stock was issued. Balance sheet data for the two companies immediately before the business combination are as follows: Peace Computer Corporation Symbol Software Company Book Value Fair Value Book Value Fair Value Cash $ 200,000 $ 200,000 $ 50,000 $ 50,000 Other Assets 400,000 400,000 120,000 120,000 Total Debits $ 600,000 $ 170,000 Current Liabilities $ 100,000 100,000 $ 80,000 80,000 Common Stock 300,000 50,000 Retained Earnings 200,000 40,000 Total Credits $ 600,000 $ 170,000 Required: Prepare a consolidated balance sheet for the companies immediately after Peace obtains ownership of Symbol by issuing the preferred stock.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Peace Computer Corporation acquired 90 percent of Symbol Software Company’s common stock on January 2, 20X3, by issuing
| Peace Computer Corporation | Symbol Software Company | |||
|---|---|---|---|---|
| Book Value | Fair Value | Book Value | Fair Value | |
| Cash | $ 200,000 | $ 200,000 | $ 50,000 | $ 50,000 |
| Other Assets | 400,000 | 400,000 | 120,000 | 120,000 |
| Total Debits | $ 600,000 | $ 170,000 | ||
| Current Liabilities | $ 100,000 | 100,000 | $ 80,000 | 80,000 |
| Common Stock | 300,000 | 50,000 | ||
| 200,000 | 40,000 | |||
| Total Credits | $ 600,000 | $ 170,000 |
Required:
Prepare a consolidated balance sheet for the companies immediately after Peace obtains ownership of Symbol by issuing the preferred stock.
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