Acquisition and Eliminating Entries Potluck Corp. acquired all of the stock of Sauers Corp. on June...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Acquisition and Eliminating Entries Potluck Corp. acquired all of the stock of Sauers Corp. on June 30, 2022, in an acquisition reported as a stock acquisition. Sauers' trial balance at the date of acquisition, along with the fair values of its assets and liabilities, are: Tangible assets Book Value Dr (Cr) Fair Value Dr (Cr) Intangible assets Liabilities Capital stock $90,000,000 22,500,000 (84,000,000) $37,500,000 135,000,000 (82,500,000) (15,000,000) Retained earnings (13,350,000) Accumulated other comprehensive income Total (150,000) $0 Potluck pays $135 million in cash and issues 2,250,000 shares of stock to the former owners of Sauers. Potluck's stock has a par value of $0.01 /share. The market price of the shares at the date of acquisition, $53 /share, is used to value the shares issued. Registration fees for the stock are $750,000 and legal and consulting fees connected with the acquisition are $900,000, both paid in cash. Required Note: Enter all zeros with your numerical answers, do not abbreviate your answers in thousands or in millions. a. Prepare the journal entry Potluck made to record the stock acquisition on its own books on June 30, 2022. Investment in Sauers Corp. Intangible assets Common stock Debit Credit 135,000,000 135,000,000 0 x 0 x 0 52,500,000 x 0 22,500 0 37,477,500 x b. Prepare working paper eliminating entries (E) and (R) to combine the accounts of Potluck and Sauers at June 30, 2022. Debit Credit (E) 0 0 0 0 0 x 0 x 0 x 0 x To eliminate Sauer's equity accounts against the investment account (R) Tangible assets 0 0 x Intangible assets 0 0 x 0 0 x 0 0 x 0 0 x To revalue Sauer's assets and liabilities to fair value Acquisition and Eliminating Entries Potluck Corp. acquired all of the stock of Sauers Corp. on June 30, 2022, in an acquisition reported as a stock acquisition. Sauers' trial balance at the date of acquisition, along with the fair values of its assets and liabilities, are: Tangible assets Book Value Dr (Cr) Fair Value Dr (Cr) Intangible assets Liabilities Capital stock $90,000,000 22,500,000 (84,000,000) $37,500,000 135,000,000 (82,500,000) (15,000,000) Retained earnings (13,350,000) Accumulated other comprehensive income Total (150,000) $0 Potluck pays $135 million in cash and issues 2,250,000 shares of stock to the former owners of Sauers. Potluck's stock has a par value of $0.01 /share. The market price of the shares at the date of acquisition, $53 /share, is used to value the shares issued. Registration fees for the stock are $750,000 and legal and consulting fees connected with the acquisition are $900,000, both paid in cash. Required Note: Enter all zeros with your numerical answers, do not abbreviate your answers in thousands or in millions. a. Prepare the journal entry Potluck made to record the stock acquisition on its own books on June 30, 2022. Investment in Sauers Corp. Intangible assets Common stock Debit Credit 135,000,000 135,000,000 0 x 0 x 0 52,500,000 x 0 22,500 0 37,477,500 x b. Prepare working paper eliminating entries (E) and (R) to combine the accounts of Potluck and Sauers at June 30, 2022. Debit Credit (E) 0 0 0 0 0 x 0 x 0 x 0 x To eliminate Sauer's equity accounts against the investment account (R) Tangible assets 0 0 x Intangible assets 0 0 x 0 0 x 0 0 x 0 0 x To revalue Sauer's assets and liabilities to fair value
Expert Answer:
Related Book For
Advanced Accounting
ISBN: 978-1934319307
2nd edition
Authors: Susan S. Hamlen, Ronald J. Huefner, James A. Largay III
Posted Date:
Students also viewed these accounting questions
-
The Company classifies its investments in both fixed income securities and publicly traded equity securities as available- for- sale investments. Fixed income securities primarily consist of U. S....
-
1. When a limited partnership is formed A. The partnership activities are limited B. All partners have limited liability C. Some of the partners have limited liability D. None of the partners have...
-
Compute seasonal relatives for this quarterly data. a. Use the SA method. b. Use the centered moving average method. c. Which set of relatives is better? Why? 37234 2-14 23 32 41 1-11 20 29 38 a1234
-
Darlings Dry Cleaning has been growing at a constant 6 percent rate for more than 20 years, and this growth is expected to continue forever. Last year, Darlings paid a dividend equal to $3.50 per...
-
In a 1975 contract, Eureka was given the exclusive right to sell spring water and other products under the Ozarka trade name in 60 Oklahoma counties in exchange for \($9,000\) paid to Arrowhead,...
-
For the year ended December 31, 2014, the job cost sheets of Cinta Company contained the following data. Other data: 1. Raw materials inventory totaled $15,000 on January 1. During the year, $140,000...
-
The external audit report suggests that the auditing firm sells software that is "bullet-proof" on upcoding but maximizes income. The finance committee receives and discusses the report. The most...
-
Assume there are 1,500 SGBM/GBM students (all levels, all locations). Calculate the ideal sample size using both Krejcie and Morgans guidelines, and Roscoes Rule of Thumb
-
How is the total budgeted purchases for a retail business calculated?
-
State an acceptable standard (benchmark) you would like to achieve. For example, if your identified behaviour is an absenteeism rate of 12%, then you might see 7% being a standard.
-
Zain Hakim's client does not have in place appropriate controls for a risk he has identified. What should Zain do?
-
With the accounting principle of prudence how do some businesses run outside of the conservative nature that we see under this accounting principle? How do the businesses take the chances to make...
-
Mario and Peter just opened a cleaning services business. Mario is saying that revenue must be recognized each time a cleaning service has been rendered. On the other hand, Peter is arguing that...
-
Simplify the given Boolean expression as mentioned below and draw the gate level diagram of the simplified equations. (AB + AC)' + A'B'C
-
What is the difference between the straight-line method of depreciation and the written down value method? Which method is more appropriate for reporting earnings?
-
The City of Portsmouth, VA authorized construction of a new police station on February l, 2014. The $15,000,000 project will be financed by a bond issue to be sold in March 2014. The City's fiscal...
-
The governmental reporting entity consists of a primary government and its component units. Various governmental structures are described below. 1. By a vote of 9-6, the Megalopolis city council...
-
The Wayne City Council approved and adopted its general fund budget for 2013. The budget contained the following amounts: Estimated revenues $70,000,000 Appropriations 66,000,000 Authorized transfer...
-
Repeat problem 41 with the specimen of size \(100 \times 100 \times 10 \mathrm{~mm}^{3}\) and the dimensions of the cavity \(104 \times 104 \times 9 \mathrm{~mm}^{3}\). Elastic constants of the...
-
Repeat problem 41 with elastic constants of the plastic as \(E=10 \mathrm{GPa}\) and \(v=0.485\). Problem 42: A rectangular plastic specimen of size \(100 \times 100 \times 10 \mathrm{~mm}^{3}\) is...
-
A rectangular plastic specimen of size \(100 \times 100 \times 10 \mathrm{~mm}^{3}\) is placed in a rectangular metal cavity. The dimensions of the cavity are \(101 \times 101 \times 9...
Study smarter with the SolutionInn App