Reference no: EM132823109

Problem 1 - On January 1, Park Corporation and Strand Corporation had condensed balance sheets as follows:

	Park	Strand
Current assets	$70,000	$20,000
Noncurrent assets	90,000	40,000
Total assets	$160,000	$60,000
Current liabilities	$30,000	$10,000
Long-term debt	50,000	0
Stockholders' equity	80,000	50,000
Total liabilities and equities	$160,000	$60,000

On January 2, Park borrowed $60,000 and used the proceeds to obtain 80 percent of the outstanding common shares of Strand. The acquisition price was considered proportionate to Strand's total fair value. The $60,000 debt is payable in 10 equal annual principal payments, plus interest, beginning December 31. The excess fair value of the investment over the underlying book value of the acquired net assets is allocated to inventory (60 percent) and to goodwill (40 percent).

Required - On a consolidated balance sheet as of January 2, what should be the amount for stockholders' equity?

Problem 2 - On January 1, Park Corporation and Strand Corporation had condensed balance sheets as follows:

	Park	Strand
Current assets	$82,000	$22,450
Noncurrent assets	105,250	42,800
Total assets	$187,250	$65,250
Current liabilities	$33,000	$15,250
Long-term debt	65,250	0
Stockholders' equity	89,000	50,000
Total liabilities and equities	$187,250	$65,250

On January 2, Park borrowed $67,600 and used the proceeds to obtain 80 percent of the outstanding common shares of Strand. The acquisition price was considered proportionate to Strand's total fair value. The $67,600 debt is payable in 10 equal annual principal payments, plus interest, beginning December 31. The excess fair value of the investment over the underlying book value of the acquired net assets is allocated to inventory (60 percent) and to goodwill (40 percent).

Required - On a consolidated balance sheet as of January 2, what should be the amount for current assets?