On January 1, 2011, Marshall Company acquired 100 percent of the outstanding common stock of Tucker Company. To acquire these shares, Marshall issued $200,000 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.

Marshall paid $30,000 to accountants, lawyers, and brokers for assistance in the acquisition and another $12,000 in connection with stock issuance costs.

Prior to these transactions, the balance sheets for the two companies were as follows:

In Marshall’s appraisal of Tucker, it deemed three accounts to be undervalued on the subsidiary’s books: Inventory by $5,000, Land by $20,000, and Buildings by $30,000. Marshall plans to maintain Tucker’s separate legal identity and to operate Tucker as a wholly owned subsidiary.
a. Determine the amounts that Marshall Company would report in its post-acquisition balance sheet. In preparing the post-acquisition balance sheet, any required adjustments to income accounts from the acquisition should be closed to Marshall’s retained earnings.
b. To verify the answers found in part (a), prepare a worksheet to consolidate the balance sheets of these two companies as of January2011.

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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, 1/1/11 Note: Parentheses indicabe a credit balance Marshall Company Book Value 60,000 270,000 360,000 200,000 420,000 $160,000 (150,000) (430,000) (110,000) Tucker Company Book Value S 20,000 90,000 140,000 180,000 220,000 50,000 (40,000) (200,000) (120,000) (360,000) (420,000) (340,000)