Consolidation: Merger is a combination where two entities merge to take the benefit of synergies where assets and liabilities of the two entities combine to form a new entity. To Prepare : a balance sheet for the combined entity immediately following the merger.

Question

Want to see more full solutions like this?

Answer 1

Question

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.

Chapter 1, Problem 1.37P

a.

To determine

Concept Introduction:

Consolidation: Merger is a combination where two entities merge to take the benefit of synergies where assets and liabilities of the two entities combine to form a new entity.

To Prepare: a balance sheet for the combined entity immediately following the merger.

a.

Expert Solution

Explanation of Solution

P Inc. and S Company
Combined Balance Sheet
January 1, 20X3
Cash and Receivable	110,000	Current Liabilities	100,000
Inventory	142,000	Capital Stock	214,000
Land	115,000	Capital in excess of par value	216,000
Plant and Equipment	540,000	Retained Earnings	240,000
Less: Accumulated Depreciation	(150,000)
Goodwill	13,000

Total	770,000	Total	770,000

Computation of Goodwill:

Fair value of the consideration given

(700×$300)=$210,000

Fair value of net assets acquired

(217,000−20,000)=(197,000)

Goodwill

Fair value of consideration given lessfair value of net assets acquired

210,000−197,000=13,000

b.

To determine

Concept Introduction:

Consolidation: Consolidation is the process of accounting where books of the parent company are reported along with the books of the subsidiary company in consolidated/combined form after making necessary adjustment entries as required in the process of consolidation.

To Prepare: stockholder’s equity section of the combined company’s balance sheet, assuming P Inc. acquires all of S Company net assets by issuing

1,100 shares of common

1,800 shares of common

3,000 shares of common

b.

Expert Solution

Explanation of Solution

(1)	Stockholder’s equity with 1,100 shares issued:

	Capital Stock (200,000+($20×1,100 shares))	$222,000
	Capital in Excess of Par Value (20,000+($300−$20)×1,100 shares)	$328,000
	Retained Earnings	$240,000
	Total	$790,000

(2)	Stockholder’s equity with 1,800 shares issued:

	Capital Stock (200,000+($20×1800 shares))	$222,000
	Capital in Excess of Par Value (20,000+($300−$20)×1,800 shares)	$524,000
	Retained Earnings	$240,000
	Total	$1,000,000

(3)	Stockholder’s equity with 3,000 shares issued:

	Capital Stock (200,000+($20×3000 shares))	$260,000
	Capital in Excess of Par Value (20,000+($300−$20)×3000 shares)	$860,000
	Retained Earnings	$240,000
	Total	$1,360,000

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

Pamrod Manufacturing acquired all the assets and liabilities of Stafford Industries on January 1, 20X2, in exchange for 4,000 shares of Pamrod's $20 par value common stock. Balance sheet data for both companies just before the merger are given as follows: Balance Sheet Items Assets Cash Accounts Receivable Inventory Land Buildings and Equipment Less: Accumulated Depreciation Total Assets Liabilities and Equities Accounts Payable Bonds Payable Common Stock: $20 par value $5 par value Additional Paid-In Capital Retained Earnings Total Liabilities and Equities Pamrod Manufacturing Book Value $ 70,000 100,000 200,000 50,000 600,000} (250,000) $ 779,000 $ 50,000 300,000 200,000 40,000 180,000 $ 770,000 Fair Value 70,000 100,000 375,000 80,000 540,000 $1,165,000 $ 50,000 310,000 Stafford Industries Book Value $ 30,000 60,000 100,000 40,000 400,000 (150,000) $ 480,000 $ 10,000 150,000 100,000 20,000 200,000 $ 480,000 Fair Value $ 30,000 60,000 160,000 30,000 350,000 $630,000 $ 10,000 145,000…

On January 1, 20X2, Parent Inc. issued 32,000 shares of its P10 par value common stock for all the outstanding shares of Son Company. The fair value of Parent Inc.'s stock is P25 per share. Parent Inc. pays P50,000 in registering the stocks. Given below are the statements of financial position (SFP) of the companies before the acquisition: Parent Inc. Statement of Financial Position January 1, 20X2 Assets Liabilities and Equity P200,000 Accounts Payable 185,000 Bonds Payable 190,000 Common Stock, P10 par value 300,000 Additional Paid-In Capital (APIC) 740,000 Retained Earnings 420,000 Total Liabilities and Equity Cash P210,000 420,000 400,000 500,000 505,000 P2,035,000 Accounts Receivable Inventory Land Building, net of depreciation Equipment, net of depreciation Total Assets P2,035,000 Son Company Statement of Financial Position January 1, 20X2 Book Value Fair Value Accounts Receivable P55,000 130,000 85,000 320,000 140,000 P730,000 P55,000 150,000 130,000 500,000 300,000 P1,135,000…

On January 1, 20X2, Parent Inc. issued 32,000 shares of its P10 par value common stock for all the outstanding shares of Son Company. The fair value of Parent Inc.'s stock is P25 per share. Parent Inc. pays P50,000 in registering the stocks. Given below are the statements of financial position (SFP) of the companies before the acquisition: Parent Inc. Statement of Financial Position January 1, 20X2 Assets Liabilities and Equity P210,000 420,000 400,000 500,000 505,000 P2,035,000 Cash P200,000 Accounts Payable 185,000 Bonds Payable 190,000 Common Stock, P10 par value 300,000 Additional Paid-In Capital (APIC) 740,000 Retained Earnings 420,000 Total Liabilities and Equity P2,035,000 Accounts Receivable Inventory Land Building, net of depreciation Equipment, net of depreciation Total Assets Son Company Statement of Financial Position January 1, 20X2 Book Value Fair Value P55,000 150,000 130,000 500,000 300,000 P1,135,000 Accounts Receivable Inventory Land P55,000 130,000 85,000 320,000…

Answer 2

Question

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.

Chapter 1, Problem 1.37P

a.

To determine

Concept Introduction:

Consolidation: Merger is a combination where two entities merge to take the benefit of synergies where assets and liabilities of the two entities combine to form a new entity.

To Prepare: a balance sheet for the combined entity immediately following the merger.

a.

Expert Solution

Explanation of Solution

P Inc. and S Company
Combined Balance Sheet
January 1, 20X3
Cash and Receivable	110,000	Current Liabilities	100,000
Inventory	142,000	Capital Stock	214,000
Land	115,000	Capital in excess of par value	216,000
Plant and Equipment	540,000	Retained Earnings	240,000
Less: Accumulated Depreciation	(150,000)
Goodwill	13,000

Total	770,000	Total	770,000

Computation of Goodwill:

Fair value of the consideration given

(700×$300)=$210,000

Fair value of net assets acquired

(217,000−20,000)=(197,000)

Goodwill

Fair value of consideration given lessfair value of net assets acquired

210,000−197,000=13,000

b.

To determine

Concept Introduction:

Consolidation: Consolidation is the process of accounting where books of the parent company are reported along with the books of the subsidiary company in consolidated/combined form after making necessary adjustment entries as required in the process of consolidation.

To Prepare: stockholder’s equity section of the combined company’s balance sheet, assuming P Inc. acquires all of S Company net assets by issuing

1,100 shares of common

1,800 shares of common

3,000 shares of common

b.

Expert Solution

Explanation of Solution

(1)	Stockholder’s equity with 1,100 shares issued:

	Capital Stock (200,000+($20×1,100 shares))	$222,000
	Capital in Excess of Par Value (20,000+($300−$20)×1,100 shares)	$328,000
	Retained Earnings	$240,000
	Total	$790,000

(2)	Stockholder’s equity with 1,800 shares issued:

	Capital Stock (200,000+($20×1800 shares))	$222,000
	Capital in Excess of Par Value (20,000+($300−$20)×1,800 shares)	$524,000
	Retained Earnings	$240,000
	Total	$1,000,000

(3)	Stockholder’s equity with 3,000 shares issued:

	Capital Stock (200,000+($20×3000 shares))	$260,000
	Capital in Excess of Par Value (20,000+($300−$20)×3000 shares)	$860,000
	Retained Earnings	$240,000
	Total	$1,360,000

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

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.

Chapter 1, Problem 1.37P

a.

To determine

Concept Introduction:

Consolidation: Merger is a combination where two entities merge to take the benefit of synergies where assets and liabilities of the two entities combine to form a new entity.

To Prepare: a balance sheet for the combined entity immediately following the merger.

a.

Expert Solution

Explanation of Solution

P Inc. and S Company
Combined Balance Sheet
January 1, 20X3
Cash and Receivable	110,000	Current Liabilities	100,000
Inventory	142,000	Capital Stock	214,000
Land	115,000	Capital in excess of par value	216,000
Plant and Equipment	540,000	Retained Earnings	240,000
Less: Accumulated Depreciation	(150,000)
Goodwill	13,000

Total	770,000	Total	770,000

Computation of Goodwill:

Fair value of the consideration given

(700×$300)=$210,000

Fair value of net assets acquired

(217,000−20,000)=(197,000)

Goodwill

Fair value of consideration given lessfair value of net assets acquired

210,000−197,000=13,000

b.

To determine

Concept Introduction:

Consolidation: Consolidation is the process of accounting where books of the parent company are reported along with the books of the subsidiary company in consolidated/combined form after making necessary adjustment entries as required in the process of consolidation.

To Prepare: stockholder’s equity section of the combined company’s balance sheet, assuming P Inc. acquires all of S Company net assets by issuing

1,100 shares of common

1,800 shares of common

3,000 shares of common

b.

Expert Solution

Explanation of Solution

(1)	Stockholder’s equity with 1,100 shares issued:

	Capital Stock (200,000+($20×1,100 shares))	$222,000
	Capital in Excess of Par Value (20,000+($300−$20)×1,100 shares)	$328,000
	Retained Earnings	$240,000
	Total	$790,000

(2)	Stockholder’s equity with 1,800 shares issued:

	Capital Stock (200,000+($20×1800 shares))	$222,000
	Capital in Excess of Par Value (20,000+($300−$20)×1,800 shares)	$524,000
	Retained Earnings	$240,000
	Total	$1,000,000

(3)	Stockholder’s equity with 3,000 shares issued:

	Capital Stock (200,000+($20×3000 shares))	$260,000
	Capital in Excess of Par Value (20,000+($300−$20)×3000 shares)	$860,000
	Retained Earnings	$240,000
	Total	$1,360,000

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

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.

Chapter 1, Problem 1.37P

a.

To determine

Concept Introduction:

Consolidation: Merger is a combination where two entities merge to take the benefit of synergies where assets and liabilities of the two entities combine to form a new entity.

To Prepare: a balance sheet for the combined entity immediately following the merger.

a.

Expert Solution

Explanation of Solution

P Inc. and S Company
Combined Balance Sheet
January 1, 20X3
Cash and Receivable	110,000	Current Liabilities	100,000
Inventory	142,000	Capital Stock	214,000
Land	115,000	Capital in excess of par value	216,000
Plant and Equipment	540,000	Retained Earnings	240,000
Less: Accumulated Depreciation	(150,000)
Goodwill	13,000

Total	770,000	Total	770,000

Computation of Goodwill:

Fair value of the consideration given

(700×$300)=$210,000

Fair value of net assets acquired

(217,000−20,000)=(197,000)

Goodwill

Fair value of consideration given lessfair value of net assets acquired

210,000−197,000=13,000

b.

To determine

Concept Introduction:

Consolidation: Consolidation is the process of accounting where books of the parent company are reported along with the books of the subsidiary company in consolidated/combined form after making necessary adjustment entries as required in the process of consolidation.

To Prepare: stockholder’s equity section of the combined company’s balance sheet, assuming P Inc. acquires all of S Company net assets by issuing

1,100 shares of common

1,800 shares of common

3,000 shares of common

b.

Expert Solution

Explanation of Solution

(1)	Stockholder’s equity with 1,100 shares issued:

	Capital Stock (200,000+($20×1,100 shares))	$222,000
	Capital in Excess of Par Value (20,000+($300−$20)×1,100 shares)	$328,000
	Retained Earnings	$240,000
	Total	$790,000

(2)	Stockholder’s equity with 1,800 shares issued:

	Capital Stock (200,000+($20×1800 shares))	$222,000
	Capital in Excess of Par Value (20,000+($300−$20)×1,800 shares)	$524,000
	Retained Earnings	$240,000
	Total	$1,000,000

(3)	Stockholder’s equity with 3,000 shares issued:

	Capital Stock (200,000+($20×3000 shares))	$260,000
	Capital in Excess of Par Value (20,000+($300−$20)×3000 shares)	$860,000
	Retained Earnings	$240,000
	Total	$1,360,000

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 1, Problem 1.37P

a.

To determine

Concept Introduction:

Consolidation: Merger is a combination where two entities merge to take the benefit of synergies where assets and liabilities of the two entities combine to form a new entity.

To Prepare: a balance sheet for the combined entity immediately following the merger.

a.

Expert Solution

Explanation of Solution

P Inc. and S Company
Combined Balance Sheet
January 1, 20X3
Cash and Receivable	110,000	Current Liabilities	100,000
Inventory	142,000	Capital Stock	214,000
Land	115,000	Capital in excess of par value	216,000
Plant and Equipment	540,000	Retained Earnings	240,000
Less: Accumulated Depreciation	(150,000)
Goodwill	13,000

Total	770,000	Total	770,000

Computation of Goodwill:

Fair value of the consideration given

(700×$300)=$210,000

Fair value of net assets acquired

(217,000−20,000)=(197,000)

Goodwill

Fair value of consideration given lessfair value of net assets acquired

210,000−197,000=13,000

b.

To determine

Concept Introduction:

Consolidation: Consolidation is the process of accounting where books of the parent company are reported along with the books of the subsidiary company in consolidated/combined form after making necessary adjustment entries as required in the process of consolidation.

To Prepare: stockholder’s equity section of the combined company’s balance sheet, assuming P Inc. acquires all of S Company net assets by issuing

1,100 shares of common

1,800 shares of common

3,000 shares of common

b.

Expert Solution

Explanation of Solution

(1)	Stockholder’s equity with 1,100 shares issued:

	Capital Stock (200,000+($20×1,100 shares))	$222,000
	Capital in Excess of Par Value (20,000+($300−$20)×1,100 shares)	$328,000
	Retained Earnings	$240,000
	Total	$790,000

(2)	Stockholder’s equity with 1,800 shares issued:

	Capital Stock (200,000+($20×1800 shares))	$222,000
	Capital in Excess of Par Value (20,000+($300−$20)×1,800 shares)	$524,000
	Retained Earnings	$240,000
	Total	$1,000,000

(3)	Stockholder’s equity with 3,000 shares issued:

	Capital Stock (200,000+($20×3000 shares))	$260,000
	Capital in Excess of Par Value (20,000+($300−$20)×3000 shares)	$860,000
	Retained Earnings	$240,000
	Total	$1,360,000

Answer 6

Chapter 1, Problem 1.37P

a.

To determine

Concept Introduction:

Consolidation: Merger is a combination where two entities merge to take the benefit of synergies where assets and liabilities of the two entities combine to form a new entity.

To Prepare: a balance sheet for the combined entity immediately following the merger.

a.

Expert Solution

Explanation of Solution

P Inc. and S Company
Combined Balance Sheet
January 1, 20X3
Cash and Receivable	110,000	Current Liabilities	100,000
Inventory	142,000	Capital Stock	214,000
Land	115,000	Capital in excess of par value	216,000
Plant and Equipment	540,000	Retained Earnings	240,000
Less: Accumulated Depreciation	(150,000)
Goodwill	13,000

Total	770,000	Total	770,000

Computation of Goodwill:

Fair value of the consideration given

(700×$300)=$210,000

Fair value of net assets acquired

(217,000−20,000)=(197,000)

Goodwill

Fair value of consideration given lessfair value of net assets acquired

210,000−197,000=13,000

Answer 7

Chapter 1, Problem 1.37P

a.

To determine

Concept Introduction:

Consolidation: Merger is a combination where two entities merge to take the benefit of synergies where assets and liabilities of the two entities combine to form a new entity.

To Prepare: a balance sheet for the combined entity immediately following the merger.

Answer 8

a.

Expert Solution

Explanation of Solution

P Inc. and S Company
Combined Balance Sheet
January 1, 20X3
Cash and Receivable	110,000	Current Liabilities	100,000
Inventory	142,000	Capital Stock	214,000
Land	115,000	Capital in excess of par value	216,000
Plant and Equipment	540,000	Retained Earnings	240,000
Less: Accumulated Depreciation	(150,000)
Goodwill	13,000

Total	770,000	Total	770,000

Computation of Goodwill:

Fair value of the consideration given

(700×$300)=$210,000

Fair value of net assets acquired

(217,000−20,000)=(197,000)

Goodwill

Fair value of consideration given lessfair value of net assets acquired

210,000−197,000=13,000

Answer 9

a.

Expert Solution

Answer 10

a.

Expert Solution

Answer 11

Expert Solution

Answer 12

b.

To determine

Concept Introduction:

Consolidation: Consolidation is the process of accounting where books of the parent company are reported along with the books of the subsidiary company in consolidated/combined form after making necessary adjustment entries as required in the process of consolidation.

To Prepare: stockholder’s equity section of the combined company’s balance sheet, assuming P Inc. acquires all of S Company net assets by issuing

1,100 shares of common

1,800 shares of common

3,000 shares of common

b.

Expert Solution

Explanation of Solution

(1)	Stockholder’s equity with 1,100 shares issued:

	Capital Stock (200,000+($20×1,100 shares))	$222,000
	Capital in Excess of Par Value (20,000+($300−$20)×1,100 shares)	$328,000
	Retained Earnings	$240,000
	Total	$790,000

(2)	Stockholder’s equity with 1,800 shares issued:

	Capital Stock (200,000+($20×1800 shares))	$222,000
	Capital in Excess of Par Value (20,000+($300−$20)×1,800 shares)	$524,000
	Retained Earnings	$240,000
	Total	$1,000,000

(3)	Stockholder’s equity with 3,000 shares issued:

	Capital Stock (200,000+($20×3000 shares))	$260,000
	Capital in Excess of Par Value (20,000+($300−$20)×3000 shares)	$860,000
	Retained Earnings	$240,000
	Total	$1,360,000

Answer 13

b.

To determine

Concept Introduction:

Consolidation: Consolidation is the process of accounting where books of the parent company are reported along with the books of the subsidiary company in consolidated/combined form after making necessary adjustment entries as required in the process of consolidation.

To Prepare: stockholder’s equity section of the combined company’s balance sheet, assuming P Inc. acquires all of S Company net assets by issuing

1,100 shares of common

1,800 shares of common

3,000 shares of common

Answer 14

b.

Expert Solution

Explanation of Solution

(1)	Stockholder’s equity with 1,100 shares issued:

	Capital Stock (200,000+($20×1,100 shares))	$222,000
	Capital in Excess of Par Value (20,000+($300−$20)×1,100 shares)	$328,000
	Retained Earnings	$240,000
	Total	$790,000

(2)	Stockholder’s equity with 1,800 shares issued:

	Capital Stock (200,000+($20×1800 shares))	$222,000
	Capital in Excess of Par Value (20,000+($300−$20)×1,800 shares)	$524,000
	Retained Earnings	$240,000
	Total	$1,000,000

(3)	Stockholder’s equity with 3,000 shares issued:

	Capital Stock (200,000+($20×3000 shares))	$260,000
	Capital in Excess of Par Value (20,000+($300−$20)×3000 shares)	$860,000
	Retained Earnings	$240,000
	Total	$1,360,000