International Technology Inc. (ITI) acquires all of the voting stock of Global Outsourcing Corporation (GOC) on...
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International Technology Inc. (ITI) acquires all of the voting stock of Global Outsourcing Corporation (GOC) on June 30, 2010. Amounts paid are as follows (in millions); Cash consideration to the former shareholders of GOC $30 36 1.8 1,200,000 shares of new $1 par common stock issued Registration fees on new stock issued, paid in cash Outside legal and advisory services, paid in cash Fair value of earnings contingency 3 1.2 The earnings contingency provides for a potential payout to the former shareholders of GOC at the end of the third year following acquisition. The balance sheets of both companies immediately prior to the acquisition are as follows. Fair values of GOC's assets and liabilities at the date of acquisition are also provided. ITI GOC Balance Sheets (in millions) Current assets Property, plant and equipment, net Intangible assets Total assets Current liabilities Long-term liabilities. Common stock, par Additional paid in capital Retained earnings Accumulated other comprehensive income Treasury stock Total liabilities and equity Advanced technology Customer lists Description $3 15 Investment in GOC Book Value Book Value Fair Value $120 300 780 $1,200 + $90 720 12 330 60 (9) (3) $1,200 Debit The intangible assets reported above consist of patents and trademarks. GOC also has the following previously unreported intangible assets that meet ASC Topic 805 requirements for asset recognition: Fair Value 0 $5 78 12 D $96 Credit $12 60 (a) Prepare the journal entry or entries ITI makes to record the acquisition on its own books (in millions and enter all decimal places). General Journal 2.4 36 (15) 1.8 (1.2) $96 $9 42 18 $12 61.8 0 D miveSUTICHIONTOUC Common stock Additional paid-in capital Cash (in millions) Current assets Property, plant and equipment, net Investment in GOC <> Intangible assets Advanced technology Customer lists Goodwill Current liabilities + Long-term liabilities Common stock, $1 par Additional paid-in capital Retained earnings Accumulated other comprehensive income Treasury stock Total: (b) Prepare a working paper to consolidate the balance sheets of ITI and GOC at June 30, 2010. Enter answers in millions and enter all decimal places. Remember to use negative signs with your credit balance answers in the Dr (Cr) columns. OOO OO $ 0 $ 0 0 Consolidation Working Paper Accounts Taken From Books ITI Dr (Cr) 0 0 0 0 1 0 0 0 0 0 0 $ 0 O O O O O O O ܘ ܘ ܘ ܘ ܘ ܘ ܘ ܘ ܘ 0 $ GOC Dr (Cr) 0 (R) $ 0 0 (R) (R) (R) (R) 0 (E) 0 0 (E) 0 (E) 0 $ LA Eliminations Debit 0 O O O O 0 0 0 0 0 0 0 $ Credit 0 (R) 0 (E) 0 (R) 0 (R) 0 (E) O (E) 0 ܘ Consolidated Balances Dr (Cr) $ $ 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 International Technology Inc. (ITI) acquires all of the voting stock of Global Outsourcing Corporation (GOC) on June 30, 2010. Amounts paid are as follows (in millions); Cash consideration to the former shareholders of GOC $30 36 1.8 1,200,000 shares of new $1 par common stock issued Registration fees on new stock issued, paid in cash Outside legal and advisory services, paid in cash Fair value of earnings contingency 3 1.2 The earnings contingency provides for a potential payout to the former shareholders of GOC at the end of the third year following acquisition. The balance sheets of both companies immediately prior to the acquisition are as follows. Fair values of GOC's assets and liabilities at the date of acquisition are also provided. ITI GOC Balance Sheets (in millions) Current assets Property, plant and equipment, net Intangible assets Total assets Current liabilities Long-term liabilities. Common stock, par Additional paid in capital Retained earnings Accumulated other comprehensive income Treasury stock Total liabilities and equity Advanced technology Customer lists Description $3 15 Investment in GOC Book Value Book Value Fair Value $120 300 780 $1,200 + $90 720 12 330 60 (9) (3) $1,200 Debit The intangible assets reported above consist of patents and trademarks. GOC also has the following previously unreported intangible assets that meet ASC Topic 805 requirements for asset recognition: Fair Value 0 $5 78 12 D $96 Credit $12 60 (a) Prepare the journal entry or entries ITI makes to record the acquisition on its own books (in millions and enter all decimal places). General Journal 2.4 36 (15) 1.8 (1.2) $96 $9 42 18 $12 61.8 0 D miveSUTICHIONTOUC Common stock Additional paid-in capital Cash (in millions) Current assets Property, plant and equipment, net Investment in GOC <> Intangible assets Advanced technology Customer lists Goodwill Current liabilities + Long-term liabilities Common stock, $1 par Additional paid-in capital Retained earnings Accumulated other comprehensive income Treasury stock Total: (b) Prepare a working paper to consolidate the balance sheets of ITI and GOC at June 30, 2010. Enter answers in millions and enter all decimal places. Remember to use negative signs with your credit balance answers in the Dr (Cr) columns. OOO OO $ 0 $ 0 0 Consolidation Working Paper Accounts Taken From Books ITI Dr (Cr) 0 0 0 0 1 0 0 0 0 0 0 $ 0 O O O O O O O ܘ ܘ ܘ ܘ ܘ ܘ ܘ ܘ ܘ 0 $ GOC Dr (Cr) 0 (R) $ 0 0 (R) (R) (R) (R) 0 (E) 0 0 (E) 0 (E) 0 $ LA Eliminations Debit 0 O O O O 0 0 0 0 0 0 0 $ Credit 0 (R) 0 (E) 0 (R) 0 (R) 0 (E) O (E) 0 ܘ Consolidated Balances Dr (Cr) $ $ 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
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Account explanation Investment in Goc 303612 Merger expensel To common stock To Additional paid in c... View the full answer
Related Book For
Advanced Accounting
ISBN: 978-1934319307
2nd edition
Authors: Susan S. Hamlen, Ronald J. Huefner, James A. Largay III
Posted Date:
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