Private Corporation acquired 100 percent of Special Corporation's common stock for $150,000 cash on January 1, 2022.
Question:
Private Corporation acquired 100 percent of Special Corporation's common stock for $150,000 cash on January 1, 2022.
Summarized balance sheet information for the two companies immediately after the combination is provided:
Private Corp. | Special Corp. | |||||||
Item | Book Value | Fair Value | ||||||
Cash and Receivables | $ | 60,000 | $ | 15,000 | $ | 15,000 | ||
Inventory | 110,000 | 32,000 | 39,000 | |||||
Buildings and Equipment (net) | 160,000 | 90,000 | 122,000 | |||||
Investment in Special Corp. Stock | 150,000 | |||||||
Total | $ | 480,000 | $ | 137,000 | ||||
Accounts Payable | $ | 40,000 | $ | 5,000 | $ | 5,000 | ||
Bonds Payable | 200,000 | 42,000 | 42,000 | |||||
Common Stock | 100,000 | 40,000 | ||||||
Retained Earnings | 140,000 | 50,000 | ||||||
Total | $ | 480,000 | $ | 137,000 |
1) What is the amount of differential associated with the acquisition?
2) What amount of goodwill will be reflected in the consolidated balance sheet?
3) What will be amount of retained earnings in the consolidated balance sheet?
4) What will be amount of inventory in the consolidated balance sheet?
Advanced Accounting
ISBN: 978-0077431808
10th edition
Authors: Joe Hoyle, Thomas Schaefer, Timothy Doupnik