Petro Incorporated and Sport Company reported summarized balance sheets as shown below, on December 31, 2019. Petro $1,050,000 Sport $525,000 1,075,000 Current assets Noncurrent assets 1,675,000 Current liabilities $575,000 875,000 $125,000 Long-term debt 375 000 On January 1, 2020, Petro purchased 80% of the outstanding capital stock of Sport for $980,000, of which $230,000 was paid in cash, and $750,000 was borrowed from their bank. The debt is to be repaid in 10 annual installments beginning on December 31, 2020, with each payment consisting of $75,000 principal, plus accrued interest. The excess fair value of Sport Company over the underlying book value is allocated to inventory (70 percent) and to goodwill (30 percent). Required: Calculate the balance in each of the following accounts, on the consolidated balance sheet, immediately following the acquisition. Current assets d Long term deht
Petro Incorporated and Sport Company reported summarized balance sheets as shown below, on December 31, 2019. Petro $1,050,000 Sport $525,000 1,075,000 Current assets Noncurrent assets 1,675,000 Current liabilities $575,000 875,000 $125,000 Long-term debt 375 000 On January 1, 2020, Petro purchased 80% of the outstanding capital stock of Sport for $980,000, of which $230,000 was paid in cash, and $750,000 was borrowed from their bank. The debt is to be repaid in 10 annual installments beginning on December 31, 2020, with each payment consisting of $75,000 principal, plus accrued interest. The excess fair value of Sport Company over the underlying book value is allocated to inventory (70 percent) and to goodwill (30 percent). Required: Calculate the balance in each of the following accounts, on the consolidated balance sheet, immediately following the acquisition. Current assets d Long term deht
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
![Petro Incorporated and Sport Company reported summarized balance sheets as shown below,
on December 31, 2019.
Petro
$1,050,000
1,675,000
$575,000
Sport
$525,000
1,075,000
$125,000
375 000
Current assets
Noncurrent assets
Current liabilities
Long-term debt
875,000
On January 1, 2020, Petro purchased 80% of the outstanding capital stock of Sport for $980,000,
of which $230,000 was paid in cash, and $750,000 was borrowed from their bank. The debt is
to be repaid in 10 annual installments beginning on December 31, 2020, with each payment
consisting of $75,000 principal, plus accrued interest.
The excess fair value of Sport Company over the underlying book value is allocated to inventory
(70 percent) and to goodwill (30 percent).
Required: Calculate the balance in each of the following accounts, on the consolidated balance
sheet, immediately following the acquisition.
a. Current assets
b. Noncurrent assets
c. Current liabilities.
d. Long-term debt
e. Stockholders' equity.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F106b1d4a-ed4d-4d54-921e-6b64b426940a%2Ff2bad545-df45-4001-9a6b-2448e6b85e3b%2F0lix5dk_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Petro Incorporated and Sport Company reported summarized balance sheets as shown below,
on December 31, 2019.
Petro
$1,050,000
1,675,000
$575,000
Sport
$525,000
1,075,000
$125,000
375 000
Current assets
Noncurrent assets
Current liabilities
Long-term debt
875,000
On January 1, 2020, Petro purchased 80% of the outstanding capital stock of Sport for $980,000,
of which $230,000 was paid in cash, and $750,000 was borrowed from their bank. The debt is
to be repaid in 10 annual installments beginning on December 31, 2020, with each payment
consisting of $75,000 principal, plus accrued interest.
The excess fair value of Sport Company over the underlying book value is allocated to inventory
(70 percent) and to goodwill (30 percent).
Required: Calculate the balance in each of the following accounts, on the consolidated balance
sheet, immediately following the acquisition.
a. Current assets
b. Noncurrent assets
c. Current liabilities.
d. Long-term debt
e. Stockholders' equity.
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