The account balances of Delenn Company and Londo Company as of December 31 are in the...

  

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The account balances of Delenn Company and Londo Company as of December 31 are in the accompanying Excel spreadsheet along with the fair values of Londa's assets and liabilities. Additional financial information: On December 31, Delenn issues 50,000 shares of its $20 par value common stock for all of the outstanding shares of Londa Company. • In creating this combination, Deleon pays $10,000 in stock issue costs and $20,000 in accounting and legal fees. Required: a. Delenn's stock has a fair value of $35 per share. 1. Prepare the necessary journal entries if Delenn dissolves Londa so that Londo is no longer a separate legal entity. 2. Assume instead that Londo will retain separate legal incorporation and maintain its own accounting system. i. Prepare the necessary journal entries on the acquisition date. Prepare a schedule showing the allocation of the difference between the book values and fair values of Londa's assets and liabilities. Prepare a worksheet to consolidate the accounts of the two companies on the acquisition date, 12/31. 3. Now assume that Deleon's stock has a fair value of $27 per share and that Londo, will retain separate legal incorporation and maintain its own accounting system. Prepare the necessary journal entries on the acquisition date. il. i. Delena Company Book Values Londo Company Book Values Londo, Company Fair Values 12/31 600,000 900,000 1,100,000 9,000,000 12/31 200,000 300,000 600,000 800,000 12/31 200,000 290,000 820,000 900,000 500,000 Cash Receivables Inventory Building and equipment (net) Unpatented technology In-process research and development Accounts payable Notes payable Totals (400,000) (3,400,000) 7,800,000 (2,000,000) (200,000) (1,100,000) 600,000 100,000 (200,000) | (1,100,000) 1,510,000 Common stock-$20 par Common stock-$5 par (220,000) (100,000) (130,000) (900,000) 750,000 (600,000) Additional paid-in capital Retained earnings, 1/1 Revenues (900,000) (2,300,000) (6,000,000) 3,400,000 (7,800,000) Expenses Totals The account balances of Delenn Company and Londo Company as of December 31 are in the accompanying Excel spreadsheet along with the fair values of Londa's assets and liabilities. Additional financial information: On December 31, Delenn issues 50,000 shares of its $20 par value common stock for all of the outstanding shares of Londa Company. • In creating this combination, Deleon pays $10,000 in stock issue costs and $20,000 in accounting and legal fees. Required: a. Delenn's stock has a fair value of $35 per share. 1. Prepare the necessary journal entries if Delenn dissolves Londa so that Londo is no longer a separate legal entity. 2. Assume instead that Londo will retain separate legal incorporation and maintain its own accounting system. i. Prepare the necessary journal entries on the acquisition date. Prepare a schedule showing the allocation of the difference between the book values and fair values of Londa's assets and liabilities. Prepare a worksheet to consolidate the accounts of the two companies on the acquisition date, 12/31. 3. Now assume that Deleon's stock has a fair value of $27 per share and that Londo, will retain separate legal incorporation and maintain its own accounting system. Prepare the necessary journal entries on the acquisition date. il. i. Delena Company Book Values Londo Company Book Values Londo, Company Fair Values 12/31 600,000 900,000 1,100,000 9,000,000 12/31 200,000 300,000 600,000 800,000 12/31 200,000 290,000 820,000 900,000 500,000 Cash Receivables Inventory Building and equipment (net) Unpatented technology In-process research and development Accounts payable Notes payable Totals (400,000) (3,400,000) 7,800,000 (2,000,000) (200,000) (1,100,000) 600,000 100,000 (200,000) | (1,100,000) 1,510,000 Common stock-$20 par Common stock-$5 par (220,000) (100,000) (130,000) (900,000) 750,000 (600,000) Additional paid-in capital Retained earnings, 1/1 Revenues (900,000) (2,300,000) (6,000,000) 3,400,000 (7,800,000) Expenses Totals

Answer rating: 100% (QA)

Answer Calculation of Goodwill Purchase of consideration 5000035 1750000 Stock issued cost 10000 Legal fees 20000 Purchase consideration a 1780000 Fai... View the full answer