The following are preliminary financial statements for Black Co. and Blue Co. for the year ending December
Question:
The following are preliminary financial statements for Black Co. and Blue Co. for the year ending December 31, 2013 prior to Black's acquisition of Blue.
Black | Blue | |
Sales | 360,000 | 228,000 |
Expenses | (240,000) | (132,000) |
Net income | 120,000 | 96,000 |
Retained Earnings, 1/1/13 | 480,000 | 252,000 |
Net income (from above) | 120,000 | 6,000 |
Dividends paid | (36,000) | - |
Retained Earnings, 12/1/13 | 564,000 | 258,000 |
Current assets | 360,000 | 120,000 |
Land | 120,000 | 108,000 |
Building (net) | 480,000 | 336,000 |
Total assets | 960,000 | 564,000 |
Liabilities | 108,000 | 132,000 |
Common stock | 192,000 | 72,000 |
Addt'l paid-in capital (APIC) | 96,000 | 12,000 |
Retained Earnings, 12/1/13 | 564,000 | 348,000 |
Total liabilities/owner's equity | 960,000 | 564,000 |
On December 31, 2013 (subsequent to the preceding statements), Black exchanged 10,000 shares of its $10 par value common stock for all of the outstanding shares of Blue. Black's stock on that date has a fiar value of $60 per share. Black was willing to issue 10,000 shares of stock because Blue's land was appraised at $204,000. Black also paid $14,000 to several attorneys and accountants who assisted in creating this combination.
REQUIRED:
Assuming that these two companies retained their separate legal identities, prepare a consolidation worksheet as of December 31, 2013 after the acquisition transaction is completed.
Advanced Accounting
ISBN: 978-0538480284
11th edition
Authors: Paul M. Fischer, William J. Tayler, Rita H. Cheng