The balance sheets for Pablo Corporation and Diego Corporation at December 31, 2016 are summarized as...
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The balance sheets for Pablo Corporation and Diego Corporation at December 31, 2016 are summarized as follows (in thousands): Pablo Corporation Diego Corporation Fair Value Book Value Fair Value Book Value Assets Cash Receivables-net Inventories Land $100 $40 $100 50 130 50 150 100 $580 $40 30 50 150 30 80 100 30 70 50 $300 50 100 100 Buildings-net Equipment-net Total assets 200 150 $750 75 $395 Equities Accounts payable Other liabilities Common stock, $10 par Other paid-in capital Retained earnings Total equities $ 80 $ 50 $ 80 100 200 100 100 $ 50 75 100 25 90 45 $580 50 $300 On January 1, 2017, Pablo Corporation acquired all of Diego Corporation's outstanding common stock for $250,000. Pablo paid $50,000 in cash and issued a five-year, 10 percent note for the balance. Diego was dissolved. REQUIRED 1. Prepare a schedule to show how the investment cost is allocated to identifiable assets and liabilities. 2. Prepare a balance sheet for Pablo Corporation on January 1, 2017, immediately after the acquisition. The balance sheets for Pablo Corporation and Diego Corporation at December 31, 2016 are summarized as follows (in thousands): Pablo Corporation Diego Corporation Fair Value Book Value Fair Value Book Value Assets Cash Receivables-net Inventories Land $100 $40 $100 50 130 50 150 100 $580 $40 30 50 150 30 80 100 30 70 50 $300 50 100 100 Buildings-net Equipment-net Total assets 200 150 $750 75 $395 Equities Accounts payable Other liabilities Common stock, $10 par Other paid-in capital Retained earnings Total equities $ 80 $ 50 $ 80 100 200 100 100 $ 50 75 100 25 90 45 $580 50 $300 On January 1, 2017, Pablo Corporation acquired all of Diego Corporation's outstanding common stock for $250,000. Pablo paid $50,000 in cash and issued a five-year, 10 percent note for the balance. Diego was dissolved. REQUIRED 1. Prepare a schedule to show how the investment cost is allocated to identifiable assets and liabilities. 2. Prepare a balance sheet for Pablo Corporation on January 1, 2017, immediately after the acquisition.
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Solution Calculation of goodwill or Capital reserve on acquisition Particulars In Thousands Assets T... View the full answer
Related Book For
Financial Accounting
ISBN: 978-0134127620
11th edition
Authors: Walter Harrison, Charles Horngren, William Thomas, Wendy Tietz
Posted Date:
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