Woodn Wares, Inc., purchased all the outstanding stock of Pail, Inc., for $950,000. Woodn Wares also paid

Wood’n Wares, Inc., purchased all the outstanding stock of Pail, Inc., for $950,000. Wood’n Wares also paid $10,000 in direct acquisition costs. Just before the investment, the two companies had the following balance sheets:

Appraisals for the assets of Pail, Inc., indicate that fair values differ from recorded book values for the inventory and for the depreciable fixed assets, which have fair values of $250,000 and $700,000, respectively.
1. Prepare the entries to record the purchase of the Pail, Inc., common stock and payment of acquisition costs.
2. Prepare the value analysis and the determination and distribution of excess schedule for the investment in Pail, Inc.
3. Prepare the elimination entries that would be made on a consolidated worksheet.

Transcribed Image Text:

Wood'n Assets Wares, Inc. $ 900,000 ,500,000 Pail, Inc. Accounts receivable Inventory.. Depreciable fixed assets (net) $ 500,000 200,000 600,000 $1,300,000 600,000 Total assets $3,000,000 Liabilities and Equity Current liabilities. Bonds payable Common stock ($10 par) Paid-in capital in excess of par Relained earnings $950,000 500,000 400,000 500,000 650,000 $3,000,000 400,000 200,000 300,000 380,000 0,000 $1,300,000 Total liabilities and equity