IT WONT ALLOW ME TO ATTACH THE SPREAD SHEET. PLEASE CONTACT ME SO I CAN PROVIDE YOU WITH A COPY.

To: Paddle-up Accounting Department From: Paddle-up Inc. Board of Directors Chairperson Date: September 18, 2018 RE: Business Acquisition Stream Company As discussed in todays meeting, Paddle-up Inc.s Board of Directors has requested pro-forma financial statements for several acquisition scenarios of Stream Company. For the past several years Paddle-Up Inc.s Executive Management Team had experienced continued pressure from their investors for their lack of growth (markets share, revenue, and profits). On September 1, 2018 the Chief Executive Officer, Chief Operating Officer, and the Chief financial Officer all resigned. Previous to the Executive Management Teams resignation, Paddle-Up Inc.s Board of Directors were in discussions with Stream Companys Board of Directors about a possible acquisition. The combination of constant pressure from investors and learning that the Board had been in negotiations with Stream Company, without their knowledge, sparked the abrupt resignations. Stream Company shareholders want cash for the sale of 100% of their company (via an Asset Acquisition). Paddle-Up Inc.s Board of Directors prefers to buy 90% of Stream Company using a combination of cash and Paddle-Up shares (via a Stock Acquisition). The Board has requested that the accounting department provide a pro-forma balance sheet at date of acquisition (use January 1, 2018 balance sheet information for both companies) for the following two scenarios: 1. Purchase 100% of Stream Company; accounting for as an asset acquisition assuming a cash only payment of $550 million. 2. Purchase 90% of Stream Company; accounting for as a stock acquisition (consolidation) assuming consideration (payment) given is a combination of cash ($50 million) and Paddle-Up stock issuance (20,000,000 shares). The Board has also requested that the accounting department provide pro-forma consolidated financial statements (income statement, statement of retained earnings, and balance sheet) for the 90% stock acquisition scenario as of December 31, 2018 (using the cost method). The Board would also like to understand the impact of the reciprocity entry which will be required for the 2019 financial statements. Finally, in addition to providing the pro-forma financial statements, the board would like you to write a one page memorandum that addresses the following: 1. Analysis of the two acquisition date scenarios (asset acquisition and stock acquisition). Include in the analysis a brief explanation of the accounting differences between asset and stock acquisitions. 2. Analysis of the consolidated financial statements as of 12/31/18. Include in the analysis why an additional workpaper entry (reciprocity) will be required when completing the 12/31/19 financial statements and not in the 12/31/18 consolidation workpaper. 3. Recommendation in regards to several ethical questions included in a note received from the Paddle-Up Inc. acquisition team (Exhibit A). Consider whether the type of acquisition (asset or stock) impacts your evaluation. 4. Analysis whether the stock acquisition of Stream Company is a good financial and strategic decision. Thank you ======================================================================== Report Requirement Detail (50 Points): A. (10 points) - Memorandum to the Board of Directors (1 page). B. (10 points) - Asset acquisition balance sheet (date of acquisition). a. Goodwill calculation b. Journal entry c. Schedule showing the impact of the journal entry on Paddle-Up Inc.s balance sheet to arrive at the post-asset acquisition balance sheet. C. (10 points) - Stock acquisition balance sheet (date of acquisition). a. Acquisition Journal entry b. CAD c. Workpaper entries in journal entry form d. Workpaper D. (15 points) - Stock acquisition 3-section workpaper as of 12/31/18 (cost method). a. Acquisition Journal entry b. Workpaper entries in journal entry form c. Workpaper E. (5 points) Reciprocity entry required for the 2019 workpaper/financial statements. Notes: 1. Items B, C, D and E each must be presented independently on ONE PAGE (i.e. Do not combine requirement C answers with requirement D answers on the same page). 2. The entire report must be submitted as ONE WORD file. 3. All financial work must be prepared in EXCEL and then copied (copy/paste picture) into the ONE WORD document (one document for the entire case). 4. The completed project evaluation will include how well the material is presented (including adhering to the noted requirements).