$"$On January $1,20$X$4,$ Acme Corporation acquired $100\%$ of the outstanding common stock of Coyote, a foreign company $($amounts translated to USD$).$ To acquire these shares, Acme issued to the owners of Coyote $$200,000$ in long$-$term liabilities and $20,000$ shares of common stock having a par value of $$1$ per share but a fair value of $$20$ per share. Acme paid $$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:"

Create journal entries identifying consolidations and investments.

Acme Corporation Coyote

Cash $ $60,000$ $ $20,000$

Receivables $270,00090,000$

Inventory $360,000140,000$

Land $200,000180,000$

Buildings $($net$)420,000220,000$

Equipment $($net$)160,00050,000$

Accounts payable $(150,000)(40,000)$

Long$-$term liabilities $(430,000)(200,000)$

Common stock $-$ $$1$ par value $(110,000)-0-$

Common stock $-$ $$20$ fair value $-0-(120,000)$

Additional paid $-$ in capital $(360,000)-0-$

Retained earnings, $1/1/$X$4(420,000)(340,000)$

Note: Parentheses indicate a credit balance.

Acme's appraisal of Coyote's fair values deemed three accounts to be undervalued: Inventory by $$5,000,$ Land by $$20,000,$ and Buildings by $$30,000.$ Acme plans to maintain Coyote's separate legal identity and to operate Coyote as a wholly owned subsidiary.

$1.$ Prepare Acme's journal entries to record its acquisition of Coyote, related professional fees paid, and stock acquisition costs.

Journal entirees are doneJournal entry for investment in Coyote Debit Credit

Investment in Coyote $600000$

Long$-$term liabilities $200000$

Common stock $20000$

Additional paid $-$ in capital $380000$

Journal entry for payment of professional fees Debit Credit

Professional Fees $30000$

Cash $30000$

Journal entry to record payment of stock issuance costs Debit Credit

Additional paid$-$in capital $12000$

cash $12000$

$2.$ Separately determine each individual amount th at Acme would report in its consolidated balance sheet following the acquisition of Coyote. Include in Acme's retained earnings any adjustments to income accounts from Part $1.$

Account Amount

Cash

Receivables

Inventory

Land

Buildings

Equipment

Goodwill

Total assets

Accounts payable

Long$-$term liabilities

Common stock

Additional paid $-$ in capital

Retained earnings

Total liabilities and equity

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