On December 31, 2016, immediately after Todd Company’s acquisition of 80% of Keller Company, their balance sheets are as attached:
An appraisal on December 31, 2016, which is considered carefully and approved by the boards of directors of both companies, places a total replacement value, less depreciation, of $2,800,000 on Keller’s depreciable fixed assets. The remaining depreciable life is 20 years. Todd Company offers to purchase all the assets of Keller Company, subject to its liabilities, as of December 31, 2016, for $2,500,000. Some of the stockholders of Keller Company object to the price because it does not include enough consideration for goodwill. 20% of the shareholders elect not to sell their shares. A counterproposal is made to 80% of the shareholders and an agreement is reached. In exchange for its own shares, Todd acquires 8,000 shares of the common stock of Keller at the agreed-upon $280 per share. The price includes a control premium. The shares held by the NCI are estimated to have a fair value of $250 each. The purchase is structured as a tax-free exchange to the seller; thus, Todd will use the book value of the assets for future tax purposes. The tax rate for both companies is 30%. Prepare a consolidated worksheet and a consolidated balance sheet as of December 31, 2016. Include a value analysis and a determination and distribution schedule.
Transcribed Image Text:Todd
Keller
$ 1,200,000
$ 50,000
300,000
1,500,000
47,000
2,100,000
Cash ...
$
Accounts receivable
2,400,000
Inventory ..
Prepayments
Depreciable fixed assets .
Investment in Keller Company..
Total assets..
11,200,000
422,000
18,978,000
2,240,000
$36,440,000
$3,997,000
$ 7,200,000
1,615,000
$1,750,000
400,000
Payables ...
Accruals. ..
Common stock ($100 par)
Paid-incapital in excess of par
Retained earnings ...
Total liabilities and equity
1,000,000
1,000,000
8,900,000
..
17,725,000
$36,440,000
847,000
$3,997,000
Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.
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