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.

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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

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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

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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

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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

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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