User Account

All Pages

Postacquisition balance sheet problem

Assignment Help Accounting Basics
Reference no: EM13154973

On January 1, 2011 Marshall acquired 100 percent of the outstanding common stock of Tucker Company. To acquire these shares, Marshall issued $200,000 in long-term liabilities and 32,000 shares of common stock having a par value of $1, but a fair value of $10 per share. Marshall paid $30,000 to accountants, lawyers, and brokers for assistance in the acquisition and another $12,000 in connection with stock issuance costs.

Prior to these transactions, the balance sheets for the two companies were as follows:

Marshall company BV Tucker company BV
Cash........... $60000 $20000
Receivables..... 270000 90000
Inventory........ 360000 140000
Land..............200000 180000
Buildings(net).....420000 220000
Equipment(net)......160000 50000
Accounts payable....(150000) (40000)
Long-term liabilities(430000) (200000)
Commom stock-$1 par value(110000) -
Common stock-$20 par value - (120000)
Additional paid-in capital(360000) -0-
Retained earnings, 1/1/11 (420000) (340000)

In Marshall's appraisal of Tucker, it deemed two accounts to be undervalued on the subsidiary's books: Land by $20,000 and Buildings by $30,000. Tucker will remain a separate legal identity and operate as a wholly owned subsidiary. Marshall appropriately uses the US/IFRS acquisition accounting with the equity method. At the point of combination, the investment advisor discovered $5,000 impairment of goodwill which is immediately written off against Marshall's retained earnings.

a) Determine the amounts that Marshall Company would report in its postacquisition balance sheet. In preparing the postacquisition balance sheet, any required adjustments to income accounts from the acquisition should be closed to Marshall's retained earnings.

b) To verify the answers found in part (a), prepare a worksheet to consolidate the balance sheets of these two companies as of January 2011.

Reference no: EM13154973

Questions Cloud

What could the federal reserve system fed do : What could the federal reserve system Fed do in 2000 in order to bring the economy back to full employment ? What did the Fed actually do? explain
How long the company owned the asset : A depreciable asset currently has a $24,500 book value. The company owning the asset uses straight-line depreciation. They paid $37,000 for this asset and consider it to have a $2,000 salvage value with a seven year useful life. How long has the c..
Solid dissociates into its respective cations and anions : When an ionic solid is added into a solvent, you can see that the ionic solid dissociates into its respective cations and anions. The solvent molecules immediately cluster around the ions.
What would your advice be to congress : what would your advice be to Congress? You must include the implications (the consequences to business and workers) in your analysis?
Postacquisition balance sheet problem : Determine the amounts that Marshall Company would report in its postacquisition balance sheet. In preparing the postacquisition balance sheet, any required adjustments to income accounts from the acquisition should be closed to Marshall's retained..
What is the resulting ph : 25 mL of 0.10 M HCl is mixed with 25 mL of .43 M NH3. What is the resulting pH?
Journal entry to record depreciation for current year : Prepare the necessary December 31 adjusting journal entry to record depreciation for the current year assuming the company uses:
What is the pressure of this gas sample : A sample of HCl gas is placed in 326mL flask where it exerts a pressure of 67.5 mmHg. What is the pressure of this gas sample if it is transferred to a 135mL flask at the same temperature?
Approximately what percentage of the acetic acid molecules : approximately what percentage of the acetic acid molecules are protonated and neutral in charge at pH 5.7?

Reviews

Write a Review

Accounting Basics Questions & Answers

  Gains and losses on sale of assets

Which of the following statements is true? I. The entire amount of realized gains and losses from the sale of assets are recognized for tax purposes.

  How should the gain be treated

During the year, Henry, a sole proprietor, sold for $65,000 a machine that was used in his business. The machine had been purchased in 2003 for $50,000, and when it was sold it had an adjusted basis of $30,000. How should this gain be treated?

  Effect of the intercompany sale of land

On April 1, 2003, Penny Corporation sells land to its 60%-owned subsidiary, Sahl Corporation, at a $15,000 gain. The land is still held by Sahl on December 31, 2003. What is the effect of the intercompany sale of land on consolidated net income?

  Direct material and direct labor cost to produce cases

Hale Company makes sets of wrenches. They are trying to decide whether to continue to make the case the wrenches are sold in, or to outsource it to another company. The direct material and direct labor cost to produce the cases total $2.00 per cas..

  Identify the internal control procedures

1. discuss the advantages and disadvantages associated with the decision to implement the new system using the big bang approach versus the phased-in approach. 2. Identify the internal control procedures (classified per COSO) that could prevent or de..

  Report on current or long-term liability

Smith Corporation is preparing its December 31, 2009, balance sheet. The following items may be reported as either a current or long-term liability.

  Specializing in accounting support for small businesses

You are an employee of BusComm Consulting. Begun as a small business just a few years ago, BusComm has outsourced its payroll and tax accounting and return preparation to Accountpreneurs, a company specializing in accounting support for small busi..

  Accounting multiple choice questions

Suppose that the total cost for your current year in college equals $20,000. Approximately how much would your parents have required to invest twentyone years ago in an account paying 8 percent compounded annually to cover this amount?

  Determiningt the correct adjusting entry

The annual interest rate on the mortgage payable was 7.75 percent. Interest expense for one-half month should be computed because the building and land were purchased and the liability incurred on June 16. What should the correct adjusting entry b..

  What are the combined total department costs

Premium Corporation has two service departments whose direct department costs are $75,000 and $10,000, respectively, and two producing departments whose direct department costs are $60,000 and $250,000, respectively. What are the combined total de..

  What major factors permitted the embezzlement to take place

Frank James, a highly competent employee of Brinkwater Sales Corporation, had been responsible for accounting-related matters for two decades. His devotion to the firm and his duties had always been exceptional, and over the years, he had been giv..

  Result of conversion of preferred stock

The market value of the common stock at the date of the conversion was $30 per share. What total amount should be credited to additional paid-in capital from common stock as a result of the conversion of the preferred stock into common stock?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd