Prepare a consolidated balance sheet for consolidated ?rm

Assignment Help Financial Accounting

Reference no: EM13950799

Purchase of shares directly from subsidiary. Prior to January 2, 20X4, People and Sample are separate corporations. Sample Corporation is contemplating a major expansion and seeks to be purchased by a larger corporation with available cash. People Corporation issues $1,200,000 of bonds and uses the proceeds to buy 30,000 newly issued Sample shares for $40 per share. Just prior to the issue of the bonds and the issue and purchase of Sample stock, People and Sample have the following separate balance sheets:

	People Corporation	Sample Corporation
Current assets .	$ 600,000	$100,000
Land.	150,000	60,000
Property, plant, and equipment	700,000	400,000
Total assets. .	$1,450,000	$560,000
Liabilities and Stockholders' Equity
Current liabilities .	$ 250,000	$100,000
Common stock ($5 par). .	400,000	100,000
Retained earnings	800,000	360,000
Total liabilities and equity	$1,450,000	$560,000

Purchasing the 30,000 new shares gives People Corporation a 60% controlling interest (30,000 of a total 50,000 common shares). On the purchase date, Sample's property is undervalued by $200,000 and has a remaining life of 20 years. Any remaining excess cost can be attributed only to goodwill.

Prepare a determination and distribution of excess schedule for People Corporation's investment in Sample. Prepare a consolidated balance sheet for the consolidated ?rm immediately after the acquisition by People Corporation.

Reference no: EM13950799

Questions Cloud

What might be some unintended consequences for play : What might be some unintended consequences for play and creative expression opportunities in early childhood care and education environments when these activities cannot be directly and obviously linked to future payback? Or, do you see evidence t..

Debt outstanding-interest and interest tax shield : Digital Organics (DO) has the opportunity to invest $0.90 million now (t = 0) and expects after-tax returns of $500,000 in t = 1 and $600,000 in t = 2. The project will last for two years only. The appropriate cost of capital is 12% with all-equity f..

Demonstrate a working knowledge : Demonstrate a working knowledge and understanding of the principles of Australian company law within the context of the prescribed readings.

Equipment will depreciated straight-line to zero book value : A potential project requires the purchase of $612,000 of equipment. The equipment will be depreciated straight-line to a zero book value over the three-year life of the project. The equipment can be scraped at the end of the project for 45 percent of..

Prepare a consolidated balance sheet for consolidated ?rm : Prepare determination and distribution of excess schedule for People Corporation's investment in Sample. Prepare a consolidated balance sheet for the consolidated ?rm immediately after the acquisition by People Corporation.

Identify which conceptual approach best fits : Identify which conceptual approach best fits the approach of each of the authors of the scholarly sources. Describe one research question you would like to explore related to learning and memory

Make annual payments into a savings plan : A couple will retire in 50 years. They plan to spend about $30,000 a year in retirement, which should last about 25 years. They believe that they can earn 8% interest on retirement savings. If they make annual payments into a savings plan, how much w..

Inventory assuming that all sales are on credit : Eagle Sports had sales in 2013 of $750,000, cost of sales of $500,000, average accounts receivable of $100,000 and average inventory of $225,000. How many days, on average, does it take Eagle Sports to sell its inventory assuming that all sales are o..

What is the fundamental frequency of the canal : Sound enters the ear, travels through the auditory canal, and reaches the eardrum. The auditory canal is approximately a tube open at only one end. The other end is closed by the eardrum. A typical length for the auditory canal in an adult is about 3..

User Account

All Pages