Potter Company acquired 100 percent of the voting common shares of Stately Corporation by issuing bonds with
Question:
Potter Company acquired 100 percent of the voting common shares of Stately Corporation by issuing bonds with a par value and fair value of $135,000 to Stately's existing shareholders. Immediately prior to the acquisition, Potter reported total assets of $510,000, liabilities of $320,000, and stockholders' equity of $190,000. At that date, Stately reported total assets of $350,000, liabilities of $215,000, and stockholders' equity of $135,000. Included in Stately's liabilities was an account payable to Potter in the amount of $15,000, which Potter included in its accounts receivable.
Required
Immediately after Potter acquired Stately's shares:
a. What amount of total assets did Potter report in its balance sheet?
b. What amount of total assets was reported in the consolidated balance sheet?
c. What amount of total liabilities was reported in the consolidated balance sheet?
d. What amount of stockholders' equity was reported in the consolidated balance sheet?
Step by Step Answer:
Advanced Financial Accounting
ISBN: 978-0073526911
8th Edition
Authors: Richard Baker, Valdean Lembke, Thomas King, Cynthia Jeffrey