International Technology Inc. (ITI) acquires all of the voting stock of Global Outsourcing Corporation (GOC) on...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
International Technology Inc. (ITI) acquires all of the voting stock of Global Outsourcing Corporation (GOC) on June 30, 2010. Amounts paid are as follows (in millions); Cash consideration to the former shareholders of GOC $30 36 1.8 1,200,000 shares of new $1 par common stock issued Registration fees on new stock issued, paid in cash Outside legal and advisory services, paid in cash Fair value of earnings contingency 3 1.2 The earnings contingency provides for a potential payout to the former shareholders of GOC at the end of the third year following acquisition. The balance sheets of both companies immediately prior to the acquisition are as follows. Fair values of GOC's assets and liabilities at the date of acquisition are also provided. ITI GOC Balance Sheets (in millions) Current assets Property, plant and equipment, net Intangible assets Total assets Current liabilities Long-term liabilities. Common stock, par Additional paid in capital Retained earnings Accumulated other comprehensive income Treasury stock Total liabilities and equity Advanced technology Customer lists Description $3 15 Investment in GOC Book Value Book Value Fair Value $120 300 780 $1,200 + $90 720 12 330 60 (9) (3) $1,200 Debit The intangible assets reported above consist of patents and trademarks. GOC also has the following previously unreported intangible assets that meet ASC Topic 805 requirements for asset recognition: Fair Value 0 $5 78 12 D $96 Credit $12 60 (a) Prepare the journal entry or entries ITI makes to record the acquisition on its own books (in millions and enter all decimal places). General Journal 2.4 36 (15) 1.8 (1.2) $96 $9 42 18 $12 61.8 0 D miveSUTICHIONTOUC Common stock Additional paid-in capital Cash (in millions) Current assets Property, plant and equipment, net Investment in GOC <> Intangible assets Advanced technology Customer lists Goodwill Current liabilities + Long-term liabilities Common stock, $1 par Additional paid-in capital Retained earnings Accumulated other comprehensive income Treasury stock Total: (b) Prepare a working paper to consolidate the balance sheets of ITI and GOC at June 30, 2010. Enter answers in millions and enter all decimal places. Remember to use negative signs with your credit balance answers in the Dr (Cr) columns. OOO OO $ 0 $ 0 0 Consolidation Working Paper Accounts Taken From Books ITI Dr (Cr) 0 0 0 0 1 0 0 0 0 0 0 $ 0 O O O O O O O ܘ ܘ ܘ ܘ ܘ ܘ ܘ ܘ ܘ 0 $ GOC Dr (Cr) 0 (R) $ 0 0 (R) (R) (R) (R) 0 (E) 0 0 (E) 0 (E) 0 $ LA Eliminations Debit 0 O O O O 0 0 0 0 0 0 0 $ Credit 0 (R) 0 (E) 0 (R) 0 (R) 0 (E) O (E) 0 ܘ Consolidated Balances Dr (Cr) $ $ 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 International Technology Inc. (ITI) acquires all of the voting stock of Global Outsourcing Corporation (GOC) on June 30, 2010. Amounts paid are as follows (in millions); Cash consideration to the former shareholders of GOC $30 36 1.8 1,200,000 shares of new $1 par common stock issued Registration fees on new stock issued, paid in cash Outside legal and advisory services, paid in cash Fair value of earnings contingency 3 1.2 The earnings contingency provides for a potential payout to the former shareholders of GOC at the end of the third year following acquisition. The balance sheets of both companies immediately prior to the acquisition are as follows. Fair values of GOC's assets and liabilities at the date of acquisition are also provided. ITI GOC Balance Sheets (in millions) Current assets Property, plant and equipment, net Intangible assets Total assets Current liabilities Long-term liabilities. Common stock, par Additional paid in capital Retained earnings Accumulated other comprehensive income Treasury stock Total liabilities and equity Advanced technology Customer lists Description $3 15 Investment in GOC Book Value Book Value Fair Value $120 300 780 $1,200 + $90 720 12 330 60 (9) (3) $1,200 Debit The intangible assets reported above consist of patents and trademarks. GOC also has the following previously unreported intangible assets that meet ASC Topic 805 requirements for asset recognition: Fair Value 0 $5 78 12 D $96 Credit $12 60 (a) Prepare the journal entry or entries ITI makes to record the acquisition on its own books (in millions and enter all decimal places). General Journal 2.4 36 (15) 1.8 (1.2) $96 $9 42 18 $12 61.8 0 D miveSUTICHIONTOUC Common stock Additional paid-in capital Cash (in millions) Current assets Property, plant and equipment, net Investment in GOC <> Intangible assets Advanced technology Customer lists Goodwill Current liabilities + Long-term liabilities Common stock, $1 par Additional paid-in capital Retained earnings Accumulated other comprehensive income Treasury stock Total: (b) Prepare a working paper to consolidate the balance sheets of ITI and GOC at June 30, 2010. Enter answers in millions and enter all decimal places. Remember to use negative signs with your credit balance answers in the Dr (Cr) columns. OOO OO $ 0 $ 0 0 Consolidation Working Paper Accounts Taken From Books ITI Dr (Cr) 0 0 0 0 1 0 0 0 0 0 0 $ 0 O O O O O O O ܘ ܘ ܘ ܘ ܘ ܘ ܘ ܘ ܘ 0 $ GOC Dr (Cr) 0 (R) $ 0 0 (R) (R) (R) (R) 0 (E) 0 0 (E) 0 (E) 0 $ LA Eliminations Debit 0 O O O O 0 0 0 0 0 0 0 $ Credit 0 (R) 0 (E) 0 (R) 0 (R) 0 (E) O (E) 0 ܘ Consolidated Balances Dr (Cr) $ $ 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Expert Answer:
Answer rating: 100% (QA)
Account explanation Investment in Goc 303612 Merger expensel To common stock To Additional paid in c... View the full answer
Related Book For
Advanced Accounting
ISBN: 978-1934319307
2nd edition
Authors: Susan S. Hamlen, Ronald J. Huefner, James A. Largay III
Posted Date:
Students also viewed these accounting questions
-
These financial statement items are for Crane Corporation at year-end, July 31, 2022. Salaries and wages payable Salaries and wages expense Supplies expense Equipment Accounts payable Service revenue...
-
Goodwill International Technology Inc. (ITI) acquires all of the voting stock of Global Outsourcing Corporation (GOC) on June 30, 2010. Amounts paid are as follows (in millions): Cash consideration...
-
International Technology Inc. (ITI) acquired all of the voting stock of Global Outsourcing Corporation (GOC) on June 30,2010, for $ 110 million in cash and stock, plus an earnings contingency payable...
-
The banker's acceptance and the commercial letter of credit involve four principal parties. Which of the following is not one of those parties? The importer The exporter O The receiving country's...
-
Refer to Practices 22-1 and 22-3. Compute fixed asset turnover for Year 2 and Year 3 for Company A.
-
For any real numbers p1,...., pn such that 0 ( pi ( 1, i =1, ...., n, show that For the left-hand side, use the inequality ex ( 1 + x, x ( (, and for the right-hand side employ the induction method?...
-
Explain why transactions are posted to the general ledger. - This is Step 3 of the accounting cycle. - To overcome the difficulty of determining account balances listed chronologically in the...
-
An investment banker is analyzing two companies that specialize in the production and sale of candied yams. Traditional Yams uses a labor-intensive approach, and Auto-Yams uses a mechanized system....
-
Express the graph shown in color using interval notation. Also express it as an inequality involving x. -2 -1 2 3 6 9 10 Use interval notation to describe the graph. What is the resulting interval?...
-
Suppose that there are p = 4 quality characteristics, and in correlation form all four variables have variance unity and that all pairwise correlation coefficients are 0.9. The in-control value of...
-
11.7 Regal Health Plans issued a 12 percent annual coupon bond a few years ago. The bond now has 10 years remaining to maturity and sells for $1,100. The bond has a call provision that allows Regal...
-
What are the emerging trends and challenges in supply chain management, and how can businesses adapt their supply chain strategies to address these trends and challenges effectively?
-
What are the key considerations for businesses when expanding into new international markets, and what strategies can they employ to mitigate risks and maximize opportunities?
-
What are the key factors that contribute to successful business partnerships, and how can companies establish and maintain mutually beneficial partnerships?
-
What are the emerging trends and opportunities in the e-commerce industry, and how can businesses capitalize on them to drive growth?
-
What are the key strategies for businesses to attract and retain top talent in a competitive labor market?
-
Do you think leadership qualities have to be inborn or do you think they can be developed? Research two different companies that are industry leaders. Share how they lead, what makes them so successfu
-
Assume Eq. 6-14 gives the drag force on a pilot plus ejection seat just after they are ejected from a plane traveling horizontally at 1300 km/h. Assume also that the mass of the seat is equal to the...
-
A U.S. parent acquired all of the stock of its British subsidiary at the beginning of 2010, when the exchange rate was $1.50/. The acquisition price exceeded the subsidiary's book value, and this...
-
Below are various types of information on the financial performance of the Town of Granville: 1. General property taxes collected. 2. Depreciation expense on general long-term assets. 3. Amount of...
-
Warren County, Ohio maintains the Scheurer-Smith Trust Fund to report restricted private contributions where the earnings are earmarked to provide education to residents of the Mary Haven Center, a...
-
More ratio analysis (Learning Objective 4) Big Bend Picture Frames has asked you to determine whether the companys ability to pay current liabilities and total liabilities improved or deteriorated...
-
Compute profitability ratios (Learning Objective 4) Compute four ratios that measure Bonapartes ability to earn profits. The companys comparative income statement follows. The data for 2004 are given...
-
Compute stock ratios (Learning Objective 4) Evaluate the common stock of Shamrock State Bank as an investment. Specifically, use the three stock ratios to determine whether the common stock has...
Study smarter with the SolutionInn App