$"$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:"

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$ par value $-0-(120,000)$

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

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.

$3.$ To verify the answers found in Part $2,$ adjust Acme's column of accounts for the journal entries in Part $1$ and then prepare a worksheet to consolidate the balance sheets of these two companies at the acquisition date.

Prepare consolidated financial statements when goodwill is present.

ACME CORPORATION AND CONSOLIDATED SUBSIDIARY COYOTE

Worksheet to prepare a Consolidated Balance Sheet

$1/1/20$X$4$

Accounts Acme Corporation Coyote Consolidation Debit Entries Credit Consolidated Totals

Cash

Receivables

Inventory

Land

Buildings $($net$)$

Equipment $($net$)$

Investment in Coyote

Goodwill

Total assets $000$

Accounts payable

Long$$term liabilities

Common stock

Additional paid $$ in capital

Retained earnings, $1/1/$X$4$

Total liab. and owners$$ equity $00000$