The balance sheets for Pablo Corporation and Diego Corporation at December 31, 2016 are summarized as follows (in thousands): Pablo Corporation Diego Corporation Book Value Fair Value Book Value Fair Value Assets Cash Receivables-net Inventories $100 $100 50 $40 30 80 $40 50 130 30 100 150
The balance sheets for Pablo Corporation and Diego Corporation at December 31, 2016 are summarized as follows (in thousands): Pablo Corporation Diego Corporation Book Value Fair Value Book Value Fair Value Assets Cash Receivables-net Inventories $100 $100 50 $40 30 80 $40 50 130 30 100 150
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Description
The balance sheets for Pablo Corporation and Diego Corporation at December 31, 2016 are summarized
as follows (in thousands):
Pablo Corporation
Diego Corporation
Book Value
Fair Value
Book Value
Fair Value
Assets
Cash
Receivables-net
Inventories
Land
$100
50
S100
50
150
$40
30
80
$40
30
100
130
100
200
150 50
$750
Buildings-net
Equipment-net
Total assets
30
70
50
100
75
S580
$300
$395
Equities
Accounts payable
Other liabilities
Common stock. $10 par
Other paid-in capital
Retained earnings
Total equities
$ 80
100
200
$ 80
$ 50
$ 50
75
100
25
50
$300
45
100
$580
On January 1. 2017, Pablo Corporation acquired all of Diego Corporation's outstanding common stock
for $250,000. Pablo paid $50.0X0 in cash and issued a five-year, 10 percent note for the balance. Diego
was dissolved.
REQUIRED
1. Prepare a schedule to show how the investment cost is allocated to identifiable assets and liabilities.
2. Prepare a balance sheet for Pablo Corporation on January 1, 2017, immediately after the acquisition.
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