Panama Incorporated and Sunny Company reported summarized balance sheets as shown below, on December 31, 2019. Panama
Question:
Panama Incorporated and Sunny Company reported summarized balance sheets as shown below, on December 31, 2019.
Panama Sunny
- Current assets $420,000 $210,000
- Noncurrent assets 670,000 430,000
- Total assets $1,090,000 $640,000
- Current liabilities $230,000 $50,000
- Long-term debt 350,000 150 000
- Stockholders' equity 510,000 440,000
- Total liabilities and equities $1,090,000 $640,000
On January 1, 2020, Panama purchased 70% of the outstanding capital stock of Sunny for $392,000, of which $92,000 was paid in cash, and $300,000 was borrowed from their bank. The debt is to be repaid in 10 annual installments beginning on December 31, 2020, with each payment consisting of $30,000 principal, plus accrued interest.
The excess fair value of Sunny Company over the underlying book value is allocated to inventory (60 percent) and to goodwill (40 percent).
Required: Calculate the balance in each of the following accounts, on the consolidated balance sheet, immediately following the acquisition.
a. Current assets
b. Noncurrent assets
c. Current liabilities
d. Long-term debt
e. Stockholders' equity
Intermediate Accounting 2014 FASB Update
ISBN: 978-1118147290
15th edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield