On January 1, 2018, Marshall Company acquired 100 percent of the outstanding common stock of Tucker...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
On January 1, 2018, 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: Marshall Company Tucker Company Book Value $ 60,000 Book Value $ 20,000 Cash Receivables 270,000 90,000 Inventory. Land. Buildings (net) Equipment (net).. Accounts payable. 360,000 140,000 200,000 180,000 420,000 220,000 160,000 50,000 (150,000) (40,000) Long-term liabilities, (430,000) (200,000) Common stock-$1 par value (110,000) Common stock-$20 par value (120,000) Additional paid-in capital.. (360,000) -0- Retained earnings, 1/1/18.. (420,000) (340,000) In Marshall's appraisal of Tucker, it deemed three accounts to be undervalued on the subsid- iary'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 postacquisition balance sheet. In preparing the postacquisition balance sheet, any required adjustments to income accounts from the acquisition should be closed to Marshall's retained earnings. Other accounts will also need to be added or adjusted to reflect the journal entries Marshall prepared in recording the acquisition. b. To verify the answers found in part (a), prepare a worksheet to consolidate the balance sheets of these two companies as of January 1, 2018. On January 1, 2018, 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: Marshall Company Tucker Company Book Value $ 60,000 Book Value $ 20,000 Cash Receivables 270,000 90,000 Inventory. Land. Buildings (net) Equipment (net).. Accounts payable. 360,000 140,000 200,000 180,000 420,000 220,000 160,000 50,000 (150,000) (40,000) Long-term liabilities, (430,000) (200,000) Common stock-$1 par value (110,000) Common stock-$20 par value (120,000) Additional paid-in capital.. (360,000) -0- Retained earnings, 1/1/18.. (420,000) (340,000) In Marshall's appraisal of Tucker, it deemed three accounts to be undervalued on the subsid- iary'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 postacquisition balance sheet. In preparing the postacquisition balance sheet, any required adjustments to income accounts from the acquisition should be closed to Marshall's retained earnings. Other accounts will also need to be added or adjusted to reflect the journal entries Marshall prepared in recording the acquisition. b. To verify the answers found in part (a), prepare a worksheet to consolidate the balance sheets of these two companies as of January 1, 2018.
Expert Answer:
Related Book For
Advanced Accounting
ISBN: 978-1259444951
13th edition
Authors: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupni
Posted Date:
Students also viewed these accounting questions
-
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...
-
On January 1, 2021, 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...
-
A certain radioactive isotope is a by - product of some nuclear reactors. Due to an explosion, a nuclear reactor experiences a massive leak of this radioactive isotope. Fortunately, the isotope has a...
-
Game Time Sports owns a recreational facility with basketball courts, pitching machines, and athletic fields. Determine whether the firm should report each of the following items as discontinued...
-
Repeat Exercises 10.7 and 10.9, but use JDBC with Java as the host language. Exercise 10.7 Consider the database shown in Figure 1.2, whose schema is shown in Figure 2.1. Write a program segment to...
-
By using six factor formula for \(k\), derive the Eqs. (7.93), (7.94) of Section 7.7.1. dkoo dp= k MB dM dB 8 + (7.93) 1+M B M B2
-
Heritage Company manufactures a beautiful bookcase that enjoys widespread popularity. The company has a backlog of orders that is large enough to keep production going indefinitely at the plants full...
-
What is Data Manipulation Language in SQL ? What are the Benefits of DML? What is DML command with example?
-
Standard Insurance Company specializes in term life insurance contracts. Cash collection experience shows that 40 percent of billed premiums are collected in the month in which they are billed, 50...
-
Give me some resources and ideas that I can use to develop a workshop on ethical dilemmas for a childcare professionals regarding the use of social media. Must include research.
-
9. The average price of gasoline in Texas in January 2018 was about $2.248/gallon and the Texas consumption of gasoline that month was 40.555 million gallons. The average price of gasoline in Texas...
-
You have $1,000 and you have 2 investment options: A) You can invest all of your money in an account that pays 5%/year or B) You can invest half of your money in an account that pays 8%, but the...
-
Suppose a firm has a fifty-fifty chance of either making $400 thousand dollars or losing $100 thousand dollarsof (gross) profit. What is the tax rate at which expected net-of-tax profit is zero,...
-
Based on the textbook's equation for Weighted Average Cost of Capital (WACC), what is the WACC based on the following: * the expected return on equity class A shares = 300%, * the expected return on...
-
After the end of World War I, overall economic growth exploded in the US in the early 1920s, but then there was a severe economic breakdown with the Great Depression of 1929-1939. Choose and discuss...
-
The nitrogen atoms in N2 participate in multiple bonding, whereas those in hydrazine, N2H4, do not. (a) Draw Lewis structures for both molecules. (b) What is the hybridization of the nitrogen atoms...
-
What does the management's discussion and analysis (MD&A) normally include? Where does a state or local government present this information? Discuss in detail.
-
Fergusson Corporation, a U.S. company, manufactures components for the automobile industry. In the past, Fergusson purchased actuators used in its products from a supplier in the United States. The...
-
Lancer, Inc. (a U.S.-based company), establishes a subsidiary in a foreign country on January 1, 2016. The following account balances for the year ending December 31, 2017, are stated in kanquo (KQ),...
-
Figure P2.4 shows a graph of position versus frame number from a video clip of a moving object. Describe this motion from beginning to end, and state any assumptions you make. Data from Figure P2.4...
-
What minimum information must be extracted from a video clip of a moving object in order to quantify the object's motion?
-
The sequence in Figure P2.3 represents a ball that is initially held above the ground. In the first frame the ball is released. In subsequent frames the ball falls, bounces on the ground, rises, and...
Study smarter with the SolutionInn App