Chapter 2, Problem 29P

On January 1, 2024, the Moody Company entered into a transaction for 100% of the outstanding common stock of Osorio Company. To acquire these shares, Moody issued $400 in long- term liabilities and also issued 40 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Moody paid $20 to lawyers, accountants, and brokers for assistance in bringing about this acquisition. Another $15 was paid in connection with stock issuance costs. Prior to these transactions, the balance sheets for the two companies were as follows: Cash Receivables Inventories Land Buildings (net) Equipment (net) Accounts payable Long-term liabilities. Common stock ($1 par) Common stock ($20 par) Additional paid-in capital Retained earnings Note: Parentheses indicate a credit balance. Multiple Choice O $1,760 In Moody's appraisal of Osorio, three assets were deemed to be undervalued on the subsidiary's books: Inventory by $10, Land by $40, and Buildings by $60. Compute the amount of…

On January 1, 2024, the Moody Company entered into a transaction for 100% of the outstanding common stock of Osorio Company. To acquire these shares, Moody issued $400 in long- term liabilities and also issued 40 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Moody paid $20 to lawyers, accountants, and brokers for assistance in bringing about this acquisition. Another $15 was paid in connection with stock issuance costs. Prior to these transactions, the balance sheets for the two companies were as follows: Cash Receivables Inventories Land Buildings (net) Equipment (net) Accounts payable Long-term liabilities Common stock ($1 par) Common stock ($20 par) Additional paid-in capital Retained earnings Note: Parentheses indicate a credit balance. Moody $ 180 810 1,080 600 1,260 480 (450) (1,290) (330) (1,080) (1,260) Osorio $40 180 280 360 440 100 (80) (400) (240) (340) (340) In Moody's appraisal of Osorio, three assets were deemed to be…

On January 1, 2018, the Moody Company entered into a transaction for 100% of the outstanding common stock of Osorio Company. To acquire these shares, Moody issued $400 in long-term liabilities and also issued 40 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Moody paid $20 to lawyers, accountants, and brokers for assistance in bringing about this acquisition. Another $15 was paid in connection with stock issuance costs. Prior to these transactions, the balance sheets for the two companies were as follows:     Moody   Osorio Cash $ 180     $ 40   Receivables   810       180   Inventories   1,080       280   Land   600       360   Buildings (net)   1,260       440   Equipment (net)   480       100   Accounts payable   (450 )     (80 ) Long-term liabilities   (1,290 )     (400 ) Common stock ($1 par)   (330 )         Common stock ($20 par)           (240 ) Additional paid-in capital   (1,080 )     (340 ) Retained…

On January 1, 2024, Presidio Company acquired 100 percent of the outstanding common stock of Mason Company. To acquire these shares, Presidio issued to the owners of Mason $310,000 in long-term liabilities and 20,000 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Presidio paid $24,000 to accountants, lawyers, and brokers for assistance in the acquisition and another $9,000 in connection with stock issuance costs. Prior to these transactions, the balance sheets for the two companies were as follows: Items Presidio Company Cash Receivables $ 75,000 354,000 Mason Company $ 38,800 90,000 Inventory Land 380,000 229,000 246,000 253,000 Buildings (net) 476,000 274,000 Equipment (net) 174,000 50,400 Accounts payable Long-term liabilities Common stock-$1 par value (241,000) (41,400) (480,000) (310,000) (110,000) 0 Common stock-$20 par value Additional paid-in capital Retained earnings, 1/1/24 0 (120,000) (360,000) (514,000) 0 (463,800) Note:…

On January 1, 2024, Presidio Company acquired 100 percent of the outstanding common stock of Mason Company. To acquire these shares, Presidio issued to the owners of Mason $273,000 in long-term liabilities and 20,000 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Presidio paid $21,000 to accountants, lawyers, and brokers for assistance in the acquisition and another $6,000 in connection with stock issuance costs. Prior to these transactions, the balance sheets for the two companies were as follows: Cash Items Presidio Company $ 62,100 $ 38,400 344,000 386,000 276,000 170,000 150,000 222,000 233,000 58,500 (66,300) 441,000 11 205,000 (192,000) (507,000) (273,000) (110,000) 0 (120,000) (360,000) (545,100) (412,600) Mason Company Receivables Inventory Land Buildings (net) Equipment (net) Accounts payable Long-term liabilities Common stock-$1 par value Common stock-$20 par value Additional paid-in capital Retained earnings, 1/1/24 Note:…

On January 1, 2024, Presidio Company acquired 100 percent of the outstanding common stock of Mason Company. To acquire these shares, Presidio issued to the owners of Mason $310,000 in long-term liabilities and 20,000 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Presidio paid $30,500 to accountants, lawyers, and brokers for assistance in the acquisition and another $15,000 in connection with stock issuance costs. Prior to these transactions, the balance sheets for the two companies were as follows: Items Presidio Company Cash Receivables Inventory Land Buildings (net) Equipment (net) Accounts payable Long-term liabilities Common stock-$1 par value Common stock-$20 par value Additional paid-in capital Retained earnings, 1/1/24 Mason Company $ 85,800 $ 39,600 361,000 189,000 362,000 211,000 269,000 185,000 425,000 276,000 217,000 52,200 (214,000) (66,300) (488,000) (310,000) (110,000) Ө Ө (120,000) (360,000) (547,800) Ө (456,500) Note:…

On January 1, 2024, Presidio Company acquired 100 percent of the outstanding common stock of Mason Company. To acquire these shares, Presidio issued to the owners of Mason $280,000 in long-term liabilities and 20,000 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Presidio paid $31,500 to accountants, lawyers, and brokers for assistance in the acquisition and another $16,000 in connection with stock issuance costs. Prior to these transactions, the balance sheets for the two companies were as follows: Items Presidio Company Mason Company Cash $ 79,200 $ 28,000 Receivables 338,000 119,000 Inventory 370,000 193,000 Land 279,000 221,000 Buildings (net) 483,000 245,000 Equipment (net) 203,000 69,900 Accounts payable (182,000) (49,500) Long-term liabilities (464,000) (280,000) Common stock—$1 par value (110,000) 0 Common stock—$20 par value 0 (120,000) Additional paid-in capital (360,000) 0 Retained earnings, 1/1/24 (636,200) (426,400) Note:…

On January 1, 2024, Presidio Company acquired 100 percent of the outstanding common stock of Mason Company. To acquire these shares, Presidio issued to the owners of Mason $283,000 in long-term liabilities and 20,000 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Presidio paid $20,500 to accountants, lawyers, and brokers for assistance in the acquisition and another $5,500 in connection with stock issuance costs. Prior to these transactions, the balance sheets for the two companies were as follows: Presidio Company $ 84,600 326,000 387,000 Items Cash Receivables Inventory Land Buildings (net) Equipment (net) Accounts payable Long-term liabilities Common stock-$1 par value on stock-$20 par value Additional paid-in capital Retained earnings, 1/1/24 218,000 463,000 253,000 (152,000) (433,000) (110,000) (360,000) (676,600) Mason Company $ 32,400 133,000 169,000 230,000 271,000 50,400 (45,600) (283,000) 0 (120,000) (437,200) 0 Note: Parentheses…

On July 1, 2020, Allen Corporation purchased 30% of the 84,000 outstanding common shares of Towne Corporation at $17 per share as a long-term investment. On the date of purchase, the book value and the fair value of the net assets of Towne Corporation were equal.  Towne Corporation paid cash dividends of $22,400 on December 30, 2020, to shareholders on record. During the year, Towne Corporation reported net income of $67,200. As of December 31, 2020, common shares of Towne Corporation were trading at $20 per share. a. Record Allen’s entries in 2020 assuming that Allen Corporation had significant influence over Towne Corporation.