Simulate an acquisition and the reporting consequences in the consolidation process.

Obtain from your assigned companies (on their corporate website) the last financial statement information. Use your parent and subsidiary information as if they would go through an acquisition process. Assume that both companies report on the same date. Use the oldest financial information to simulate an acquisition process.

Parent Company: SGC Superior Group Of companies

Subsidiary company: UNF UniFirst Corp

The bases for the acquisition are the following.

1. The parent acquired 90% of the shares (find stock prices in http://finance.yahoo.com). The entry is debit on the investment, with a credit on debt.
2. As a consequence of the acquisition, the subsidiary included a brand name for $200 million (life expectancy 10 years).
3. The company selected an initial method for updating the investment values.
4. As of the consolidation, the following intra-entity transactions occur:

Year	Intra-Entity Sales Millions	Intra-Entity Ending Inventory at Transfer Price	Gross Profit Rate on Intra-Entity Inventory Transfers
1	$2,200	$125	28%
2	$3,000	$160	25%

At year-end, there are no intra-entity payables or receivables

Prepare a consolidated worksheet to determine the appropriate balances for external financial reporting for both years (the oldest and the newest date as the first year of the financial statements). Present a Balance sheet and income statement for both years comparative. Include financial notes to explain your assumptions and the consolidation process. Include all the assumptions that you need in the disclosures notes.

Your final delivery has to include four pages both of the worksheets, the final balance sheet, and the income statement.