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The balance sheet of Parent Enterprises as at December 31, Year 5, is as follows: Assets Cash Accounts receivable Inventory Property, plant and equipment Accumulated depreciation Liabilities and Equity Current liabilities Bonds payable Common shares (116,000 shares) Retained earnings $ 125,500 159,000 207,400 1,852,000 (916,000) $1,427,900 $ 258,000 368,000 236,000 565.900

The balance sheet of Parent Enterprises as at December 31, Year 5, is as follows: Assets Cash Accounts receivable Inventory Property, plant and equipment Accumulated depreciation Liabilities and Equity Current liabilities Bonds payable Common shares (116,000 shares) Retained earnings $ 125,500 159,000 207,400 1,852,000 (916,000) $1,427,900 $ 258,000 368,000 236,000 565.900

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Costs of issuing shares Professional fees The balance sheet of Subsid Industries as at December 31, Year 5, is as follows: Carrying Amount Fair Value Cash Accounts receivable Inventory Property, plant and equipment Accumulated depreciation $ 60,000 54,500 $ 114,500 Current liabilities Liability for warranties Common shares Retained earnings $ 71,000 $ 71,000 291,000 304,500 203,000 186,200 1,329,000 1,193,500 (316,000) $1,578,000 $ 153,500 115,000 676,000 633,500 $1,578,000 153,500 147,400 The shareholders of Subsid accept Parent's offer on the proposed date. Subsid Industries is to be wound up after the sale. Required: (a) Calculate the Acquisition Differential and Goodwill amounts. (b) Prepare the adjustment journal entries of the worksheet. (c) Prepare Parent's January 1, Year 6, consolidated balance sheet after the proposed transaction occurred by using the worksheet approach.
Transcribed Image Text:Costs of issuing shares Professional fees The balance sheet of Subsid Industries as at December 31, Year 5, is as follows: Carrying Amount Fair Value Cash Accounts receivable Inventory Property, plant and equipment Accumulated depreciation $ 60,000 54,500 $ 114,500 Current liabilities Liability for warranties Common shares Retained earnings $ 71,000 $ 71,000 291,000 304,500 203,000 186,200 1,329,000 1,193,500 (316,000) $1,578,000 $ 153,500 115,000 676,000 633,500 $1,578,000 153,500 147,400 The shareholders of Subsid accept Parent's offer on the proposed date. Subsid Industries is to be wound up after the sale. Required: (a) Calculate the Acquisition Differential and Goodwill amounts. (b) Prepare the adjustment journal entries of the worksheet. (c) Prepare Parent's January 1, Year 6, consolidated balance sheet after the proposed transaction occurred by using the worksheet approach.
The balance sheet of Parent Enterprises as at December 31, Year 5, is as follows: Assets Cash Accounts receivable Inventory Property, plant and equipment Accumulated depreciation Current liabilities Bonds payable Liabilities and Equity Common shares (116,000 shares) Retained earnings Costs of issuing shares Professional fees $ 125,500 159,000 207,400 1,852,000 (916,000) $1,427,900 Effective January 1, Year 6, Parent proposes to issue 90,500 common shares (currently trading at $20 per share) for all of the common shares of Subsid Industries. In determining the acquisition price, the management of Parent noted that Subsid Industries has unrecorded customer service contracts and directed its accounting staff to reflect this when recording the acquisition. An independent appraiser placed a value of $166,000 on this unrecorded intangible asset. Direct costs associated with the acquisition were as follows: $ 60,000 54,500 $ 114,500 $ 258,000 368,000 236,000 565,900 $1,427,900
Transcribed Image Text:The balance sheet of Parent Enterprises as at December 31, Year 5, is as follows: Assets Cash Accounts receivable Inventory Property, plant and equipment Accumulated depreciation Current liabilities Bonds payable Liabilities and Equity Common shares (116,000 shares) Retained earnings Costs of issuing shares Professional fees $ 125,500 159,000 207,400 1,852,000 (916,000) $1,427,900 Effective January 1, Year 6, Parent proposes to issue 90,500 common shares (currently trading at $20 per share) for all of the common shares of Subsid Industries. In determining the acquisition price, the management of Parent noted that Subsid Industries has unrecorded customer service contracts and directed its accounting staff to reflect this when recording the acquisition. An independent appraiser placed a value of $166,000 on this unrecorded intangible asset. Direct costs associated with the acquisition were as follows: $ 60,000 54,500 $ 114,500 $ 258,000 368,000 236,000 565,900 $1,427,900
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