Homework Help is Here – Start Your Trial Now!
Business
Accounting
Required: a. Prepare Presidio's journal entries to record its acquisition of Mason, related professional fees paid, and stock acquisition costs. b. Separately determine each individual amount that Presidio Company would report in its consolidated balance sheet following the acquisition of Mason. Include in Presidio's retained earnings any adjustments to income accounts from part (a). c. To verify the answers found in part (b), adjust Presidio's column of accounts for the journal entries in part (a) and then prepare a worksheet to consolidate the balance sheets of these two companies at the acquisition date.

Required: a. Prepare Presidio's journal entries to record its acquisition of Mason, related professional fees paid, and stock acquisition costs. b. Separately determine each individual amount that Presidio Company would report in its consolidated balance sheet following the acquisition of Mason. Include in Presidio's retained earnings any adjustments to income accounts from part (a). c. To verify the answers found in part (b), adjust Presidio's column of accounts for the journal entries in part (a) and then prepare a worksheet to consolidate the balance sheets of these two companies at the acquisition date.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question

Rahul 

On January 1, 2024, Presidio Company acquired 100 percent of the outstanding common stock of Mason Company. To acquire these shares, Presidio issued to the owners of Mason $200,000 in long-term liabilities and 20,000 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Presidio paid $30,000 to accountants, lawyers, and brokers for assistance in the acquisition and another $12,000 in connection with stock issuance costs. Prior to these transactions, the balance sheets for the two companies were as follows: Cash Receivables Inventory Land Items Buildings (net) Equipment (net) Accounts payable Long-term liabilities. Presidio Company $60,000 270,000 360,000 200,000 420,000 160,000 (150,000) (430,000) (110,000) Common stock-$1 par value Common stock-$20 par value Additional paid-in capital Retained earnings, 1/1/24 Note: Parentheses indicate a credit balance. (360,000) (420,000) Mason Company $ 20,000 90,000 140,000 180,000 220,000 50,000 (40,000) (200,000) (120,000) (340,000) 0 Presidio's appraisal of Mason's fair values deemed three accounts to be undervalued: Inventory by $5,000, Land by $20,000, and Buildings by $30,000. Presidio plans to maintain Mason's separate legal identity and to operate Mason as a wholly owned subsidiary. Required: a. Prepare Presidio's journal entries to record its acquisition of Mason, related professional fees paid, and stock acquisition costs. b. Separately determine each individual amount that Presidio Company would report in its consolidated balance sheet following the acquisition of Mason. Include in Presidio's retained earnings any adjustments to income accounts from part (a). c. To verify the answers found in part (b), adjust Presidio's column of accounts for the journal entries in part (a) and then prepare a worksheet to consolidate the balance sheets of these two companies at the acquisition date.
Transcribed Image Text:On January 1, 2024, Presidio Company acquired 100 percent of the outstanding common stock of Mason Company. To acquire these shares, Presidio issued to the owners of Mason $200,000 in long-term liabilities and 20,000 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Presidio paid $30,000 to accountants, lawyers, and brokers for assistance in the acquisition and another $12,000 in connection with stock issuance costs. Prior to these transactions, the balance sheets for the two companies were as follows: Cash Receivables Inventory Land Items Buildings (net) Equipment (net) Accounts payable Long-term liabilities. Presidio Company $60,000 270,000 360,000 200,000 420,000 160,000 (150,000) (430,000) (110,000) Common stock-$1 par value Common stock-$20 par value Additional paid-in capital Retained earnings, 1/1/24 Note: Parentheses indicate a credit balance. (360,000) (420,000) Mason Company $ 20,000 90,000 140,000 180,000 220,000 50,000 (40,000) (200,000) (120,000) (340,000) 0 Presidio's appraisal of Mason's fair values deemed three accounts to be undervalued: Inventory by $5,000, Land by $20,000, and Buildings by $30,000. Presidio plans to maintain Mason's separate legal identity and to operate Mason as a wholly owned subsidiary. Required: a. Prepare Presidio's journal entries to record its acquisition of Mason, related professional fees paid, and stock acquisition costs. b. Separately determine each individual amount that Presidio Company would report in its consolidated balance sheet following the acquisition of Mason. Include in Presidio's retained earnings any adjustments to income accounts from part (a). c. To verify the answers found in part (b), adjust Presidio's column of accounts for the journal entries in part (a) and then prepare a worksheet to consolidate the balance sheets of these two companies at the acquisition date.
Expert Solution
steps

Step by step

Solved in 5 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Double entry bookkeeping system
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS