Question
Accounting consolidation - please explain Paccu Corporation acquired 100 percent of Sallee Companys common stock on January 1, 20X7. Balance sheet data for the two
Accounting consolidation - please explain
Paccu Corporation acquired 100 percent of Sallee Companys common stock on January 1, 20X7. Balance sheet data for the two companies immediately following the acquisition follow:
Paccu Sallee
Cash $50,000 $30,000
Accounts Receivable 60,000 35,000
Inventory 130,000 45,000
Land 75,000 60,000
Buildings and Equipment 310,000 170,000
Less: Accumulated Depreciation (130,000) (30,000)
Investment in Sallee Company Stock 250,000
Total Assets $745,000 $310,000
Accounts Payable $40,000 $35,000
Taxes Payable 30,000 12,000
Bonds Payable 250,000 50,000
Common Stock 75,000 75,000
Retained Earnings 350,000 138,000
Total Liabilities and Stockholders Equity $745,000 $310,000
At the date of the business combination, the book values of Sallees assets and liabilities approximated fair value except for inventory, which had a fair value of $55,000, and land, which had a fair value of $65,000. The fair value of land for Paccu Corporation was estimated at $90,000 immediately prior to the acquisition.
19. Based on the preceding information, what amount of total assets will appear in the consolidated balance sheet prepared immediately after the business combination?
The answer is $842,000. Can you please explain how to get that? Thank you very much.
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