unit 2 extra problem 1 On June 30, 200X P paid $375,000 cash for 100% of the Common Stock of S Company. The transaction is an acquisition of wherein the acquired company is not dissolved. S Company is maintained as a separate subsidiary of P Company. It is still an entity, but in this case P Company owns all of it?s stock.

Template Post Problem 1 Statutory Merger SEC Registration Fee SEC Registration legal fees Finder's fee Merger legal fees Merger accounting fees 20,000 20,000 6,000 2,000 4,000 52,000 stock issue stock issue merger merger merger Carl Corporation General Ledger Cash 80,000 Plant 300,000 Liabilities 80,000 Merger Expense Cash Accounts Receivable Paid in Capital Cash Investment in Lin Company Common Stock Paid in Capital Inventory 80,000 Land 20,000 Investment in Lin Co. Capital Stock 10,000 Paid in Capital 190,000 0 Cash Accounts receivable Plant Goodwill Liabilities Investment in Lin Co. Computation of Goodwill Fair Value of Consideration transferred Book value of Lin Co. Excess fair value over book Allocated to plant Goodwill Goodwill Merger Expense 30,000 Retained Earnings 200,000 Assets Cash Accts. Rec. Inventory Plant Land Goodwill Total Carl Corporation Balance Sheet Liabilities and Equity Liabilities Capital Stock Paid in capital Retained earnings Total ADVANCED ACCOUNTING UNIT 2 POST PROBLEM - SEPARATE SUBSIDIARY On June 30, 200X P paid $375,000 cash for 100% of the Common Stock of S Company. The transaction is an acquisition of wherein the acquired company is not dissolved. S Company is maintained as a separate subsidiary of P Company. It is still an entity, but in this case P Company owns all of it's stock. Following information is shown prior to acquisition being recorded: P Company Assets Cash Inventories Plant Assets 590,000 Total Liabilities and Capital $580,000 60,000 340,000 Current Liabilities Common Stock $5PV Additional Paid in Capital Retained Earnings $980,000 Total $90,000 100,000 200,000 $980,000 S Company Assets Inventories Other Assets Plant Assets Liabilities and Capital $ 20,000 40,000 140,000 Current Liabilities $30,000 Long Term Liabilities 50,000 Common Stock $10 PV 40,000 Additional Paid in Capital 20,000 Total $200,000 Retained Earnings Total 60,000 $200,000 Differences between identifiable net assets of S Company were: Inventories Plant Current Fair Value $50,000 250,000 Book Value $20,000 140,000 Difference $30,000 110,000 A. Prepare the journal entries showing the purchase B. Prepare a schedule showing the amount of goodwill from this purchase. C Prepare a consolidation worksheet showing the eliminations. D. Prepare a consolidated balance sheet AS OF June 30, 200X using the consolidation worksheet as a basis